Better Dividend Stock: W.P. Carey vs. Annaly Capital Management
Dividend investors often focus first on dividend yield, which makes some logical sense. However there's a risk in over-focusing on yield. A great case in point is the comparison of Annaly Capital Management (NYSE: NLY) and W.P. Carey (NYSE: WPC). Annaly has a dramatically higher yield at around 14%, but most investors will likely be better off with W.P. Carey's 5.6% yield. Here's what you need to know when choosing between these two high-yield real estate investment trusts (REITs).Annaly Capital Management is a mortgage REIT. It buys mortgages that have been pooled together into bond-like securities. Mortgage REITs are a highly specialized niche of the broader REIT sector, where most companies buy physical properties. The bond-like securities that Annaly buys trade all day long and their value is impacted by things like interest rates, housing market conditions, and mortgage repayment trends. It is a pretty complex business that is difficult for shareholders to track.Image source: Getty Images.Continue reading
Dividend investors often focus first on dividend yield, which makes some logical sense. However there's a risk in over-focusing on yield. A great case in point is the comparison of Annaly Capital Management (NYSE: NLY) and W.P. Carey (NYSE: WPC). Annaly has a dramatically higher yield at around 14%, but most investors will likely be better off with W.P. Carey's 5.6% yield. Here's what you need to know when choosing between these two high-yield real estate investment trusts (REITs).
Annaly Capital Management is a mortgage REIT. It buys mortgages that have been pooled together into bond-like securities. Mortgage REITs are a highly specialized niche of the broader REIT sector, where most companies buy physical properties. The bond-like securities that Annaly buys trade all day long and their value is impacted by things like interest rates, housing market conditions, and mortgage repayment trends. It is a pretty complex business that is difficult for shareholders to track.
Image source: Getty Images.
