NLY has to pay out a huge percent of it's earnings - so - where do they get $ 1.5 B to
buy back their stock ? - I just upped my NLY shrs. up by 1800 shrs. . hope NLY don't drop the divy
too far.... the dollar don't go as near as far as it used to...
just ask "fstout57" - or shortie on the board.
It's important not to use P/E for REITs, or to compare P/E for REITs with P/E for non-REIT stocks. Funds from Operations, or FFO, is a standardized metric, though not GAAP; AFFO is not standardized, and equity analysts have different ways of constructing it. Both of them are better than earnings for valuing REITs.
By utilizing price to FFO valuation, analysts and investors can determine the trading history of each REIT by itself and relative to the entire REIT sector. Accordingly, payout ratios are based on AFFO (adjusted funds from operations) because it more accurately measures cash flow when compared to net income (due to depreciation), and given the contractual nature of lease payments today, earnings growth rates are higher than the S&P. Here is a snapshot of the FFO multiple compared with the S&P P/E multiple. Keep in mind that the FFO multiple has little impact to European/Chinese exposure (as compared with the S&P)