American Capital Agency Corp. (AGNC), Capstead Mortgage Corporation (CMO): 3 Reasons to Sell Annaly Capital Management, Inc. (NLY)

In addition, its spread — the source of most of its income — has shrunk to a measly 0.95%. Compare this to American Capital Agency Corp. (NASDAQ:AGNC)’s 1.63% and Capstead Mortgage Corporation (NYSE:CMO)’s 1.13%, and you can see why Annaly Capital Management, Inc. (NYSE:NLY)’s dividend is looking somewhat anemic.

The exit of Fannie and Freddie could hurt Annaly
An especially problematic issue is that of the government’s winding down of government-sponsored entities Fannie Mae and Freddie Mac. Of course, the exit of the two GSEs that currently back the lion’s share of mortgage-backed securities might put all agency mREITs in peril. But Annaly, as the largest of all these players, would probably suffer the most, as investor concerns regarding the winding-down process impact the value of its current holdings — and, very possibly — make finding new investments with an acceptable risk level more difficult.

Should these issues cause investors to run from Annaly Capital Management, Inc. (NYSE:NLY)? Not necessarily. It is always better to be safe than sorry, though, and knowing all the facts before you make any important decision — particularly one concerning investing — should be priority No. 1.

The article 3 Reasons to Sell Annaly Capital originally appeared on Fool.com and is written by Amanda Alix.

Fool contributor Amanda Alix has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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