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Why Annaly's Held up Well in 2012

As we approach the halfway point for 2012, now's a good time to look back at what's happening with the stocks that interest you. By making sure you know the important things that a company accomplished -- as well as the setbacks it experienced -- you can make a better decision about whether it's a smart investment for your portfolio.

Today, let's take a look at Annaly Capital (NYSE: NLY  ) . The company is arguably the best-known mortgage REIT, investing in mortgage-backed securities with borrowed money in an attempt to goose its returns. In the current low interest rate environment, that strategy has produced huge dividends, but some fear that the good times can't last forever. Let's take a quick look at how the stock is doing so far this year.

Stats on Annaly Capital

2012 YTD Return 11.0%
Market Capitalization $16.7 billion
Net Income, Most Recent Quarter $902 million
Year-Over-Year Net Income Growth, Most Recent Quarter 28.8%
Change in Quarterly Dividend, Past 2 years (19.1%)
Forward Dividend Yield 12.9%
CAPS Rating ****

Source: S&P Capital IQ.

How has Annaly rewarded its shareholders?
Things have worked out very well for Annaly in terms of the macroeconomic environment. Continued economic weakness has led the Federal Reserve to reassure investors that it doesn't plan any interest rate hikes anytime soon, and although the continuation of Operation Twist is a potential threat to the company's interest margins, the impact thus far has been fairly minimal.

The longer-term concern is what will happen when interest rates turn. Already, declining margins have forced Annaly, American Capital Agency (Nasdaq: AGNC  ) , and Hatteras Financial (NYSE: HTS  ) to make significant dividend cuts from peak levels over the past couple of years. Chimera Investment (NYSE: CIM  ) , which specializes in non-agency mortgage-backed debt, has had even more extreme cuts, with its most recent dividend just half what it was at its peak.

The good news for Annaly, though, is that it sustained its $0.55 quarterly dividend for the second quarter in a row. That probably won't last forever, but it has undoubtedly helped support the stock so far this year. Annaly doesn't give you the biggest dividend yield of any mortgage REIT, but with $120 billion in assets on its balance sheet, it's clearly the bellwether of the group and should provide good signals for the health of the mortgage REIT sector generally.

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Click here to add Annaly Capital to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. The Motley Fool owns shares of Annaly Capital. Motley Fool newsletter services have recommended buying shares of Annaly Capital. 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 Fool has a disclosure policy.

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Related Tickers

10/24/2016 11:53 AM
NLY $10.11 Up +0.03 +0.25%
Annaly Capital Man… CAPS Rating: ****
AGNC $19.53 Up +0.05 +0.24%
American Capital A… CAPS Rating: ***
CIM $15.42 Up +0.02 +0.13%
Chimera Investment CAPS Rating: ***
HTS.DL $0.00 Down +0.00 +0.00%
Hatteras Financial CAPS Rating: ****