Agency mREIT investors can thank FBR Capital Markets for the sell-off this week. FBR downgraded Annaly Capital Management (NLY) on Monday, warning investors that Annaly could cut its dividend soon.
Wow…thanks for the insight, Einstein!
Annaly has already cut its dividend three times in the past five quarters.
We don’t know about you, but as long time Annaly shareholders, we have already prepared ourselves for future cuts.
The Current Environment is Ideal for Agency mREITs
As we highlighted in a recent article, we think mortgage REITS, particularly agency REITs, continue to be a suitable investment for investors seeking good risk-adjusted yield. Agency mortgages are guaranteed by government-sponsored entities (implying limited credit risk). Conversely, non-agency securities do not carry a similar implied guarantee, making them inherently more risky due to the higher relative credit risk.
