Annaly Capital (NYSE:NLY) on Wednesday announced it was cutting its quarterly dividend by 12% to $0.22 per share.
"As we mentioned on our first quarter 2020 earnings call, we are constructive on the operating environment and anticipate core earnings will exceed our quarterly distribution for the second quarter," said the the real estate investment trust's CEO and CIO, David Finkelstein. "Together with our board, we have taken a measured approach to setting a dividend level we feel is sustainable in the current environment."
The stock price was down about 2% in early trading Thursday and is down about 30% for the year. It is up 63% since falling to a low of $4.02 on April 3. The dividend will be distributed July 31 to shareholders of record on June 30.
Finkelstein added that the company has repurchased over $100 million in common stock so far in the current quarter. "We think it is a prudent allocation of capital as our stock remains undervalued relative to our continued improvement in book value while still allowing us to maintain a robust liquidity reservoir," he said.
Annaly's book value per share fell 22% to $7.50 at the end of the first quarter. The stock is trading at roughly 7 times earnings.
As a mortgage REIT, Annaly Capital invests in mortgages and mortgage-backed securities. The majority of its holdings are safer, agency mortgage-backed securities issued by the quasi-governmental agencies Freddie Mac, Fannie Mae, and Ginnie Mae.
The company reported net earnings of about $330 million, down significantly from $433 million in 2019' first quarter. Earnings per share fell year over year from $0.29 to $0.21.