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Well, lets look at share price without dividends first last 14 years:
And you would have dividend worth more than your investment over this time frame. Yep, don't want any of this crap. You should go out and buy some apple or amzn or priceline right now. I am sure they will continue to pay those great dividends and go higher. What? No dividends ever paid? Oh!
Stick with NLY. Cash distributions. Enough said.
I first bought Annaly in the last quarter of 2002. After accounting for a loss in share price, my annual total return has been over 8%. That was without reinvesting the dividends. Not spectacular, and certainly not worry free, but very rewarding compared with equities in general over the last 9 years. I do think NLY is a gamble that not everyone can afford to take.
Let's see. I bought AGNC in Feb 2011. I am down ~$1,100 on the share price since then. I am up $3,900 in dividends. A return of ~14%.
Gee, I just wish I had more cash to put there.
NLY similar but not as good of a story. Down $208 on share price. Up $237 in dividend. So only about a 3.5% return. But it IS just ex-div a few days. Can't get 3.5% in a bank on a $1,500 investment. And diversification is everything, even within a segment. I'm cash positive in this segment with ease.
Why is this hard to figure out???
Really, why don't you go and look at the total return on this stock in your brokerage account. The total return based on the last 5 years is 121%. Buy on dips and just soak up the dividend. I've been doing it for years and am quite happy.
I wish you pointed all this out to me 2 years ago before I made all that money. Just being a little facetious.
NLY is indeed risky - that's why they pay such a high dividend, but they are managing the business conservatively. They way I see it, you have until 2014 to decide if they'll be able to continue paying such a high dividend. In that time, the NAV might shrink a bit, but they're still throwing off massive cash, so it's really hard to lose. You have to get in at exactly the wrong time.
If you plot the NAV quarterly over the past two years, adding back in the dividend payouts, I think you'll see the truth about how well this has performed. I don't see any immediate reason to think that will change in the next several quarters.
Now, the CEO has recently been acting a bit smug on investor conference calls, and I suspect a lot of analysts are trying to modify his behavior, rightly. While I hope they are successful, I also hope things go along at NLY EXACTLY like they have over the past two.
The dividend is the dividend because they are required to pay 90% of their profits to shareholders. They don't raise or lower the dividend based on how risky the stock is.
The beta on this stock is .30! Boeing, Microsoft, Oracle, Alcoa, Clorox, Johnson and Johnson... all are higher.
Don't base your stock picks on how smug you think a CEO is. If that were the case, most companies would be at zero.