Could Buying Ultra-High-Yield Annaly Capital Stock Today Set You Up for Life?

Core Viewpoint - Annaly Capital Management offers a high dividend yield of 12.2%, significantly above the S&P 500's 1.2% yield, but it is not a reliable dividend stock for investors seeking consistent income [1][3]. Dividend History and Volatility - Annaly's dividend history shows significant volatility, making it difficult for investors to rely on it for stable income [5][6]. - The stock price of Annaly is also highly volatile, which compounds the risk for investors relying on dividends [5][6]. Investment Strategy - Annaly is not focused on being a reliable dividend stock; instead, it aims for strong total returns, which assumes reinvestment of dividends rather than spending them [8][12]. - When viewed through the lens of total returns, Annaly has performed slightly better than the S&P 500 since its IPO, although the paths of these returns differ significantly [9][11]. Business Model - Annaly operates as a mortgage real estate investment trust (mREIT), purchasing mortgages pooled into bond-like securities, similar to a mutual fund [11]. - The company's value is primarily derived from its mortgage securities portfolio, which fluctuates over time [11]. Investor Considerations - Investors should understand that Annaly is a well-respected mREIT, but it is essential to focus on total returns rather than yield alone [12][13]. - Those who invest in Annaly with the expectation of generating reliable income may end up disappointed based on historical performance [13].