Annaly Capital Management (NLY) May Be the 'REIT' Stock for You! - Cramer
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Price: $18.58 -0.32%
Overall Analyst Rating:
NEUTRAL (
Up)
Dividend Yield: 13.8%
EPS Growth %: -28.1%
Overall Analyst Rating:
NEUTRAL (
Up)Dividend Yield: 13.8%
EPS Growth %: -28.1%
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Annaly Capital Management, Inc. (NYSE: NLY) is a REIT that focuses mostly on mortgage pass-through securities, CMOs, callable debentures, and so on, which has made it an unfavorable investment for those who are adverse to higher-risk investments. However, Jim Cramer recently said that the company has been "officially" removed from his 'Sell Block,' and said that its okay for investors to get back in to the oft-beleaguered investment.
Cramer says that the REIT was initially on the selling block because of fears that the company wouldn't be able to attain the short-term funding it needs to continue its operations. That was back in 2008, when the stock traded for about $15, and slid to $11 shortly thereafter in the midst of the financial meltdown.
However, Cramer now sees the stock regaining some of its prior losses and is now poised to profit because of the ability to borrow money at lower interest rates and invest in higher-yielding mortgage bonds. Because its a REIT, the company returns 90% of its profits to shareholders, making the dividend yield on the stock 15.5%.
Investors may still have fears the there could be further difficulties with mortgages, as the Fed is surely to increase lending rates sooner than later and unemployment is still a key figure, but Cramer says that those fears are already baked into the price of the stock, which, at $16.76, trades below its book value of $18. Shares of the stock have returned 469% to holders over the last 10 years and 42% over the last five, despite the torrid market conditions as of recent.
Finally, Cramer is making the call that investors that stick with the stock could see a double in the investment within 4.5 years, assuming reinvested dividends.
Cramer says that the REIT was initially on the selling block because of fears that the company wouldn't be able to attain the short-term funding it needs to continue its operations. That was back in 2008, when the stock traded for about $15, and slid to $11 shortly thereafter in the midst of the financial meltdown.
However, Cramer now sees the stock regaining some of its prior losses and is now poised to profit because of the ability to borrow money at lower interest rates and invest in higher-yielding mortgage bonds. Because its a REIT, the company returns 90% of its profits to shareholders, making the dividend yield on the stock 15.5%.
Investors may still have fears the there could be further difficulties with mortgages, as the Fed is surely to increase lending rates sooner than later and unemployment is still a key figure, but Cramer says that those fears are already baked into the price of the stock, which, at $16.76, trades below its book value of $18. Shares of the stock have returned 469% to holders over the last 10 years and 42% over the last five, despite the torrid market conditions as of recent.
Finally, Cramer is making the call that investors that stick with the stock could see a double in the investment within 4.5 years, assuming reinvested dividends.
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