Sometimes A 7.5% Yield Beats An 11% Yield

I've been keeping an eye on most of the preferred shares within the mortgage REIT sector. Each week, I run the analysis for subscribers. I highlighted this security a few times, but it still trades at better valuations than the other preferred shares. This company has four series of preferred stock, one of which continues to impress me. I recently bought in on the E series because the fundamentals make it more attractive than the other series given current prices. The yield is only around 7.5-7.6%, but I expect share prices to remain solid.

Annaly Capital Management (NYSE:NLY) is the largest mortgage REIT. Relative to most of its sector, the share price more rapidly incorporates changes in market sentiment and in the expected value of the company's assets. For all the wonders of an "efficient market", the giant mortgage REIT can still move between trading at huge discounts or, in some periods, huge premiums to book value. As it stands, the market has become substantially more optimistic, and shares of Annaly Capital Management trade at a small discount to both the Q2 book value and my estimates of current book value.

Source: Seeking Alpha

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