Why Not Buy This 6.8%-Preferred Stock Yield?

The stock's 11.5 percent common stock yield is risky. The mortgage REIT's Series G preferred stock is a promising alternative to the common stock. The Series G has a higher degree of principal safety as well as an attractive dividend yield. An investment in the Series G yields 6.8 percent.

Annaly Capital Management, Inc.'s (NLY) eleven-and-a-half percent dividend is risky. The mortgage REIT has a narrow margin of dividend safety, and it slashed its dividend payout in the past. However, investors that like Annaly Capital Management's business model (but not the high risk) can also make an investment in the mortgage REIT's preferred stock layer. The Series G preferred stock, for instance, is a promising income vehicle because it combines fixed and floating rate dividend payments to shareholders and it provides some downside protection. An investment in the Series G preferred stock comes with a dividend yield of 6.8 percent.

Source: Seeking Alpha

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