Annaly Capital Management, Inc. (NLY) Earnings Report: Sick of Playing It Safe?

What about book value? Normally, you would expect Annaly’s book to have increased more than Invesco’s, due to QE3 and its resultant rationing of mortgage-backed securities available for sale. But there were a few things that pulled down Annaly’s book value, including the share buybacks that the company executed and huge unrealized losses — a good chunk of which came from the company’s swap hedges.

Then, of course, there’s the question of dividends. Invesco paid $0.65 per share, unchanged since the end of 2011. Annaly, however, has been steadily chipping away at its payout over the past two years, with no end in sight. Adding a new ingredient to the mix (hello, Crexus) might just be what the dividend doctor ordered.

What does all this mean for other agency REITs, such as American Capital Agency? Unlike Annaly, American has been paying out a plump divvy for the better part of a year now. Does that mean that, unlike Annaly, American will not feel the need to expand into uncharted territory? Or, once it sees how the new business plan works for Annaly, will it, too, be jumping on the diversification bandwagon?

The article Annaly Earnings Report: Sick of Playing It Safe? 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 owns shares of Annaly Capital Management (NYSE:NLY).

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