Better Dividend Stock: W.P. Carey vs. Annaly Capital Management

Core Viewpoint - Dividend investors should be cautious about over-focusing on high dividend yields, as seen in the comparison between Annaly Capital Management and W.P. Carey, where a lower yield may provide more reliable income over time [1]. Company Overview - Annaly Capital Management operates as a mortgage REIT, purchasing pooled mortgages that are traded as bond-like securities, which are influenced by interest rates and housing market conditions [2]. - The business model of Annaly involves significant leverage, which can amplify both gains and losses, depending on the volatility of mortgage securities [4]. Dividend Analysis - Annaly's 14% dividend yield is not reliable for investors seeking consistent income, as both its dividend and stock price have declined over time, indicating potential risks for those who rely on dividends for living expenses [5][7]. - In contrast, W.P. Carey, despite cutting its dividend in late 2023, has a history of 24 consecutive annual increases and has resumed increasing its dividend quarterly since the cut, suggesting a more stable income stream for investors [8][9]. Business Model Comparison - W.P. Carey's business model is more traditional, focusing on physical properties that generate rental income, which allows for potential growth in dividends over time, contrasting with Annaly's total return investment approach that relies on dividend reinvestment [9][10]. - The recent dividend cut by W.P. Carey was a strategic decision to exit the struggling office sector, positioning the company for long-term growth and making it potentially more attractive for investors seeking reliable income [8].