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Sunday, February 20, 2011

Annaly Capital Still an “Outperform,” but Wary of Possible Dividend Cut (NLY)

Analysts at FBR Capital on Friday passed along some interesting opinions regarding real estate-related investment manager Annaly Capital Management, Inc. (NLY) on Friday.
Although the firm maintained its “Outperform” rating and $20 price target on NLY, it noted a dividend cut could be in the works for the company.

An FBR analyst commented, “We reiterate our rating and price target on NLY shares despite last week’s weaker-than-expected 4Q10 earnings results. While the results give us pause as to the viability of the current dividend, we believe that shares remain attractive from a long-term, risk-adjusted total return perspective. With a historically steep yield curve, the FOMC estimated to be on hold for at least another year, and declining prepayment speeds, we continue to believe that the operating environment is set up for NLY to deliver mid-to-high teen ROEs, and likewise dividend yields, for the foreseeable future.”
Annaly Capital shares were mostly flat in premarket trading Friday.

The Bottom Line

Shares of Annaly Capital (NLY) have a 14.29% dividend yield, based on last night’s closing stock price of $17.92. The stock has technical support in the $15-$17 price area. If the shares can firm up, we see overhead resistance around the $20 price level.

Disclosure I am Long NLY shares. 

1 comment:

  1. I have heard james grant take about Annaly many times. This trust pays a very very high yield but has never been in financial trouble.