1 Obvious Reason Annaly Capital Management, Inc. Is a Bad Stock for Your Retirement Portfolio

Are you in or nearing retirement and want a great dividend stock? If so, you should probably think twice before buying Annaly Capital Management.

May 10, 2014 at 8:00AM


There are few stocks in the market today that seem to be as attractive as Annaly Capital Management (NYSE:NLY). However, there's much more to this stock than simply its 10.4% dividend yield.

In short, Annaly's best days are now in the rearview mirror and for the most part only challenges lay ahead. As a mortgage real estate investment trust, Annaly prospers when one or both of two conditions prevail. First, when the spread between short- and long-term interest rates expands. And second, when they do so in a declining interest rate environment.

This is why the financial crisis was a godsend for mortgage REITs. In response to the turmoil, the Federal Reserve dropped short-term rates to nearly zero. Meanwhile, although long-term rates followed suit, they took longer to decline and fell by a smaller margin.


The net result was that the spread between short- and long-term rates expanded, creating a particularly profitable scenario for mortgage REITs. Added to this, because interest rates decreased across the board, Annaly also got a boost to its book value, as MBS values and long-term rates are inversely correlated.

As Motley Fool contributor John Maxfield discusses in the video below, however, the current environment couldn't be further removed from this.

The better alternative to Annaly
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

John Maxfield has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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