This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

'TWO' Smart Ways to Participate in the Rental Housing Boom

NEW YORK ( TheStreet) -- Just as the word on the Street says that the Federal Reserve is telling member banks to pick up the pace on lending, we have a chance to buy two companies that are poised to profit from their generosity.

To make matters more exciting, one of these companies, Annaly Mortgage (NLY - Get Report) just announced after the markets closed on Tuesday that its board has authorized the real estate investment trust to buy back as much as $1.5 billion worth of its outstanding common stock over a 12-month period.

That's nearly 10% of the outstanding shares based on NLY's Oct. 16 market cap of $15.32 billion. The buybacks will be made periodically on the open market or in privately negotiated transactions, the company said. After rising during Tuesday's session almost 1% it gained another 1.5% in afterhours trading.

Founded in 1997, Annaly is the largest mortgage REIT listed on the New York Stock Exchange. Its stock total return performance over the last 15 years and the amount of dividends paid are brilliantly illustrated by charts on the company's well-organized Web site.

NLY has corrected over the past month as a result of concerns about a rise in mortgage refinancing and bond prepayments. This was blamed on falling interest rates fueled by Fed policy and the Fed's massive mortgage-backed securities purchases.

The shares of NLY fell from their 52-week highs of $17.75 on Sept. 12 and corrected to an intraday low on Monday, Oct. 15 of $15.27. That's a gut-wrenching fall of 14% in a little over a month and not what income-oriented investors are used to.

A telephone interview and report by Bloomberg with NLY's co-CEO Wellington Denahan-Norris helped put things in perspective and shed light on the correction of mortgage REITS like NLY.

The report stated that, "Mortgage REITs are losing investors who have been attracted by average annual dividend yields currently at about 13%, or almost seven times that of Standard & Poor's 500 companies. The firms use cash raised through share sales and borrowed money to invest in government-backed mortgage securities, housing debt at risk from defaults, or both."
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
NLY $9.35 0.00%
TWO $9.93 0.00%
AAPL $126.44 0.00%
FB $87.28 0.00%
GOOG $523.40 0.00%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs