Last week, I added 6 shares of (NLY) Annaly Capital Management, Inc. to the portfolio at a price of $17.40 per share.  Basically, I added the stock to the portfolio because it has a ridiculously high dividend yield of over 17%.  While a dividend yield that high isn't likely to be sustainable long term, I thought I would pick up an amazing yield while I can.  Plus, Annaly Capital does have a nice dividend paying history, so even if the payout rate ends up being lower that its current rate, it is still likely to be a very good dividend.  Also, the company operates as a (REIT) real estate investment trust, which requires them to pay out at least 90% of its taxable income to its shareholders.

As it turns out,  Annaly's earnings slightly beat expectations yesterday after the bell, so I was able to get a little pop in the price I entered the stock at.  For the quarter, NLY earned $0.79 per share in core earnings per share, while they earned $1.31 per share on a GAAP basis.  How the company makes money can be a complex question, but basically the company invests in a variety of mortgage back investments and earns a return for its shareholders.  Leverage is a necessary tool for this type of company, but it has done a good job of managing its leverage to withstand the financial crisis that hindered or eliminated many similar type companies.  As of the end of 2009, Annaly Capital had a leverage ratio of 5.7 to 1.

Finally, NLY is only trading at a slight premium to its tangible book value.  However, this number can be very misleading when it comes to mortgage related investments.  What the mortgage securities are valued on the books at and what the true value of the mortgage securities are can vary considerable.  All we need to do to prove this point is look back at what some of the book values were before the housing meltdown happened and what their true value actually was.  Regardless, the Own Every Stock Portfolio had very little exposure to the REIT market, so I thought I would add (NLY) Annaly Capital Management, Inc. to the portfolio.  Once again, I encourage everyone to do their own due diligence before purchasing any investments as I am not making a recommendation but rather supplying information about my holdings in the Own Every Stock Portfolio.  Thanks for stopping by.