Is Annaly Capital Stock a Millionaire Maker?
Annaly Capital (NYSE: NLY) is a complicated investment. It appears to be a dividend stock because it has a huge 12.9% dividend yield. For comparison, the yield on the S 500 (SNPINDEX: ^GSPC) is only 1.2% or so. Yet, if you examine the stock's dividend history, you would definitely not want to own it believing you will collect a reliable income stream. Whether or not Annaly is a millionaire-maker stock really depends on what you do with the dividends it pays. Here's what you need to know.
Annaly Capital is a real estate investment trust (REIT), which is a business structure specifically designed to pass income on to investors in a tax-efficient manner. Essentially, REITs avoid corporate-level taxation by distributing at least 90% of taxable earnings to shareholders as dividends. So most REITs have fairly high yields, with the average for the sector sitting at nearly 3.9%.
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Source Fool.com
