Annaly Capital Management: Buy, Sell, or Hold?

Core Viewpoint - Annaly Capital Management, a mortgage REIT, offers a high dividend yield of over 13%, but it may not be suitable for passive income investors due to its complex nature and declining dividend trend over the past decade [6][9][13]. Group 1: Dividend Yield and Total Return - The dividend yield for Annaly has consistently been in the double digits, making it appear attractive, but the actual dividend has been trending lower for over 10 years [6][9]. - Annaly's total return has outperformed the S&P 500 index since its inception in 1997, although the outperformance is relatively small [2][4]. Group 2: Target Investors - The stock may appeal to a specific group of investors, particularly large institutional investors like pension funds and family offices, who are looking for mortgage exposure in their portfolios [4][5]. - Small investors may lack the resources to manage the complexities associated with mortgage REITs, making Annaly more suitable for institutional investors [5][8]. Group 3: Risks and Considerations - Mortgage REITs like Annaly use leverage, which increases risk, and are affected by interest rate changes, housing market dynamics, and mortgage repayment trends [5]. - The high dividend yield can be misleading, as it does not necessarily indicate a stable or growing income stream for passive income investors [7][14].