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Annaly Capital Management, Inc. Message Board

  • thomasvic thomasvic Nov 16, 2002 2:46 PM Flag

    NLY had its run..time to sell n'move on

    This stock has gained about 40-50 percent in the last year including dividends..which for a REIT is quite something.
    Realistically, given that interest rates really can't go down much more..in fact probably won't go down again..how can NLY profits and dividends not go down. This is why we have not reached old highs of 20 dollars..
    I am tired of hearing people say "last year we were told that the interest rate cuts over and they were wrong thus people are wrong again now". If you think in a reasonable fashion..its plain to see that the US economy is at its bottom now..interst rates are at 40 year lows thus do you really think the odds are high for more rate cuts..the odds are at best for rates to stay the same for a few more months and by next summer the trend to be upwards.
    Don't fall in love with a stock or a sector..in my opinion many people here are looking at the performance of MSB reits over the past year or so..believing that it will continue..in my opinion the time to sell is very soon..even if they declare a dividend of 68 cents this quarted..which may happen. Whats important is the trend over the next year which is certanly negative.
    Will be selling my NLY shortly.

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    • I was just attempting (I guess unsuccessfully) a little humor. A hefty dividend doesn't guarantee a constant stock price and payouts do get reduced (AXM).

    • It appears you missed the point I was trying to make. The original poster said that NLY should maintain the 15.5% yield and that should raise the dividend to $3.80. What I was trying to say is that NLY does not attempt to maintain the yield but simply pays the dividend from at least 90% of its earnings. The yield is determined from the share price and earnings.

    • "Am I missing something?"

      Not unless you want to sell the stock at some point or those earnings, of which you spoke, disappear. 90% of nothing is still nothing.

    • The point of the discussion is that if NLY were to go to 24.50 it would be the earnings that would drive it to there. Otherwise the yield would drop significantly. In order to maintain the 15.5% yield the divi would have to be 3.80.

      Ciao.........tassi

    • As a matter of fact, NLY management has stated several times including an e-mail to me, that they will pay out virtually 100% of earnings in the form of dividends even though they are only required to pay out more than 90%.

    • It is my understanding that NLY pays 90% of earnings as a dividend. Why should we be concerned with stock price and yield when the dividend will always be 90% of earnings?

      Am I missing something?

    • shfling allycat,

      Thanks for the comments, I truly need to be questioned about any of my statements. Educational.

      What I was refering to is for NLY to go to 24.50 the divi would have to go to 3.80 in order to maintain 15.5% yield thus being in the same ballpark as other MREITs.

      If NLY went to 24.50 but still paid the current divi the yield would be 11.1%. I don't believe that would happen at this point in time unless it was anticipated the yield would increase 40%.

      Am I making an incorrect point? Any comment is welcome.


      Ciao.........tassi

    • Tassi,

      You really twisted what Momentone1965 reported. He reported that Merrill Ross stated that NLY could maintain current dividends, not maintain current yields. I am sure this was an unintentional twist, but you need to reread Momentone1065's post. If they would raise dividends to 3.80 as you suggest wouldn't they be raising dividends, not maintaining them?

      Momentone's post said:
      << Interesting article in Money Magazine (Dec. 2002 issue) regarding good buys in the "Housing Boon" without buying Real Estate.
      Page 127-129...mentions NLY. Article quotes investment bank analyst, Merrill
      Ross of Friedman Billings Ramsey who says that recent compression NLY's profit margins (betwen June and early Nov.) is not serious enough to lower dividens. If Merrill Ross is correct...NLY significantly is undervalued...this analyst is looking for NLY, currently trading at just a little above six times trailing earnings to head up to $24.50. >>

    • Very interesting projection by Merrill Ross.
      For NLY to go to 24.50 and maintain the current yield of 15.5% the divi will go to 3.80, a 40% increase. Do you think that can happen? Sure would be nice but I question it can over the next year. I assume his projection was for 12 months.

      Ciao.........tassi

    • Interesting article in Money Magazine (Dec. 2002 issue) regarding good buys in the "Housing Boon" without buying Real Estate.
      Page 127-129...mentions NLY. Article quotes investment bank analyst, Merrill
      Ross of Friedman Billings Ramsey who says that recent compression NLY's profit margins (betwen June and early Nov.) is not serious enough to lower dividens. If Merrill Ross is correct...NLY significantly is undervalued...this analyst is looking for NLY, currently trading at just a little above six times trailing earnings to head up to $24.50.

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