Annaly Capital Management Inc.  (NLY) Trade Now »     Rate NLY  -  Discuss NLY  -  Add to Watch List        

Filed under: Newsletters, Stocks to Buy, Recession

"Annaly Capital (NYSE: NLY) is in the sweet spot," says Steve Sjuggerud in Daily Wealth. He says, "It borrows money at a low interest rate and invests it at a higher rate -- and earns the 'spread'."

"The cost of money is historically low, and it's headed lower. Meanwhile, relative to the cost of money, the return on money is higher than it's ever been.

"The ultimate way trade on this historic discrepancy, for high-returns with very low risk, is through shares of companies like Annaly, which is now s now paying a 16% dividend.

"In the latest-r

Stabilizing home prices and unfreezing the mortgage market is the paramount focus of US policy makers. The first significant step in this process occurred with the passage of the Housing bill and the US government now explicitly guaranteeing Freddie Mac (FRE) and Fannie Mae (FNM) backed mortgage securities (also known as Agency MBS or Agency debt) and effectively nationalizing more than 50% of the US mortgage market. What this also means is that Agency MBS are now equivalent to Treasuries in terms of risk profile, which implies that the yield spread between Agency MBS and Treasuries of simi

With increased refinances through all of 2008, NLY will continue to increase its mortgages.  These aren't subprime loans, they're guaranteed by Freddie Mac and Fannie Mae, which is ultimately guaranteed by the US gov't, for a formidably strong dividend and capital appreciation from EPS growth.  It's as nice as an FDIC savings account, although with a stronger dividend interest. 

Great hold, great buy on any pull backs.  A best of breed.