Is Annaly Capital Stock a Millionaire Maker?
Annaly Capital increased its dividend at the start of 2025.
The mortgage REIT has a huge 14%+ dividend yield.
Make sure you understand what you are buying before you chase Annaly's lofty yield.
10 stocks we like better than Annaly Capital Management ›
Annaly Capital Management (NYSE: NLY) has an enticing 14%+ dividend yield backed by a dividend that was just increased. Some on Wall Street believe that the safest dividends are those that have just been raised. But don't let greed drive your decision-making; there's more to know about Annaly than just the size of its dividend yield if you want to become a millionaire someday.
Annaly's business model is risky
Annaly Capital is a real estate investment trust (REIT). However, unlike most REITs, it doesn't purchase properties. Traditional REITs essentially do what you would do if you owned a rental property, but they do it on an institutional scale. Annaly buys mortgages that have been pooled into bond-like securities. This is a vastly different business model, one that would be very hard for a small investor to replicate in any way.
Essentially, Annaly aims to earn the difference between the interest it earns from the mortgage securities it buys and its costs. Those costs include general operating expenses, as well as the cost of leverage. A significant portion of the leverage Annaly uses amounts to loans backed by the mortgage securities it owns. This is not a low-risk business.
Moreover, unlike a physical property, mortgage securities trade all day long, leading to swift changes in the value of the portfolio. Factors such as interest rates, housing market dynamics, and even mortgage repayment rates can impact mortgage security prices. It would be hard for most investors even to track what's going on here.
Basically, mortgage REITs (mREITs) like Annaly should probably be owned only by more active and perhaps more aggressive investors -- notice that statement didn't include dividend investors.
NLY data by YCharts.
You can't rely on Annaly's dividend
If you are trying to build wealth with dividend stocks, Annaly won't be a good fit for your portfolio. The chart above shows you all you need to know. The orange line is the annual dividend, which has been highly volatile. And up until the recent increase, it had been heading lower for years. The purple line is the stock price, which has been just as volatile as the dividend, and it, too, has been trending lower for years.
A lofty dividend yield hasn't translated into a reliable and perhaps growing income stream, which is what most long-term dividend investors are really looking for. But there's an important nuance here, as Annaly Capital isn't actually focused on the dividend per se; it's focused on generating total return. That assumes that dividends get reinvested, not spent on daily living expenses.
NLY data by YCharts.
If you are focused on total return, Annaly has been a win. Notice in the chart above that its total return has kept pace with that of the S&P 500 (SNPINDEX: ^GSPC) over time. But the two don't move in lockstep, which makes Annaly an interesting candidate for adding to an asset allocation model, as it offers attractive diversification potential. While dividend investors may not find Annaly to their liking, asset allocators may like it a great deal.
Can Annaly help you build a seven-figure portfolio?
Annaly Capital's ability to help you reach millionaire status depends greatly on what you are trying to achieve when you buy a stock. If the goal is to generate a reliable and growing income stream, even if you aren't yet using that income, history suggests that Annaly will likely be a big letdown. It just isn't focused on that goal.
However, if you are laser-focused on total return and like to have a portfolio diversified across different asset classes, this mREIT could be right up your alley. Just go in knowing that dividend reinvestment is what lets Annaly meet its total return goal.
Should you invest $1,000 in Annaly Capital Management right now?
Before you buy stock in Annaly Capital Management, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Annaly Capital Management wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,010,880!*
Now, it's worth noting Stock Advisor 's total average return is1,047% — a market-crushing outperformance compared to180%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of July 7, 2025
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
31 minutes ago
- Globe and Mail
Prediction: These 2 AI Chip Stocks Will Outperform Nvidia Over the Next 5 Years
Key Points Nvidia is the dominant player in AI infrastructure, but its size could limit some of its upside. AMD and Broadcom, meanwhile, have huge opportunities. Given their smaller sizes, the stocks have the potential to outperform Nvidia in the coming years. 10 stocks we like better than Advanced Micro Devices › Nvidia is the undisputed king of artificial intelligence (AI) infrastructure. The company has a dominant share in the graphics processing unit (GPU) market, where its chips provide the processing power necessary to run AI workloads. Its CUDA software platform has helped create a wide moat, giving the company over 90% market share in the GPU space. That said, Nvidia has become a mammoth company, recently hitting a $4 trillion market cap. As such, it now faces the law of large numbers. It can keep growing, but it will get more difficult to keep up the same pace. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » That's why the stocks of Advanced Micro Devices (NASDAQ: AMD) and Broadcom (NASDAQ: AVGO) could outperform the GPU leader over the next five years. Both have smaller revenue bases to work from and big potential tailwinds. Advanced Micro Devices AMD, as the company is also known, has been seeing strong revenue growth, but its AI opportunity could just be getting started. While it's still a distant second to Nvidia in GPUs, it has been able to carve out a niche in AI inference. On its last earnings call, AMD said that one of the largest AI model companies in the world is using its GPUs to run a significant chunk of its daily inference workloads. Major cloud providers have been using its chips to run search, recommendation engines, and generative AI tasks. The company's ROCm software platform still trails CUDA, but it's generally considered good enough when it comes to inference. The reason the stock can outperform, though, largely comes down to size. Nvidia's data center revenue hit $39.1 billion last quarter, while AMD's was just $3.7 billion. It doesn't have to take massive share from the leader to see explosive growth, as even modest wins can make a big impact. AMD is also a leader in data center central processing units (CPUs), where it has gained meaningful share against Intel. CPUs act as the brains of the operation, so as AI workloads expand, demand for high-performance CPUs will also grow. Meanwhile, the UALink Consortium which was formed by AMD, Intel, Broadcom, and others, is looking to challenge Nvidia's NVLink and its proprietary interconnects. It wants to develop an open standard for high-speed, low-latency interconnects for AI accelerators in data centers. If successful, it could erode one of Nvidia's biggest advantages and open the door for companies to use clusters of multiple vendors. That would be huge for AMD. With AI inference expected to eventually eclipse training in size, AMD has a big opportunity. Broadcom Broadcom isn't directly chasing Nvidia in the GPU market. Instead, it's competing against the company in AI networking and by helping customers design custom AI chips. Broadcom makes networking components -- like Ethernet switches and optical interconnects -- that are essential in transferring huge data volumes across large AI clusters. As these clusters get bigger, so do networking demands. This is helping drive the company's revenue growth, and last quarter its AI networking revenue surged 70%. However, the company's biggest opportunity is in application-specific integrated circuits (ASICs). It helped Alphabet develop its highly successful Tensor Processing Units (TPUs) and is now designing custom AI chips for several other hyperscalers (companies that operate huge data centers). These custom chips can deliver better performance and power efficiency than off-the-shelf GPUs, and demand is growing fast. Management has said that its three custom AI chip customers that are the furthest along in their development are planning to deploy up to 1 million chip clusters each by its fiscal 2027, representing a $60 billion to $90 billion opportunity. That doesn't even include newer wins like Apple. And given the up-front costs of designing custom chips, they are typically used in large deployments. Broadcom also owns VMware, which is becoming increasingly important in AI cloud environments. Its Cloud Foundation platform helps enterprises manage AI workloads across hybrid and multi-cloud environments, and it is seeing strong upselling to this platform. With its networking portfolio, custom chips, and virtualization software, the company has a lot of growth in front of it. The bottom line Nvidia is still a great company, and its stock has room to move higher. However, it just saw its data center revenue increase more than ninefold in two years. At some point, it gets harder to keep posting that type of breakneck growth. Meanwhile, AMD and Broadcom both have much smaller AI-related revenue streams today. If AMD can take some GPU market share in inference, that would be a huge growth driver. And if Broadcom's customers start producing a huge amount of custom chips based on its intellectual property, it could unlock tens of billions in high-margin revenue. As such, I think both AMD and Broadcom stocks are well-positioned to outperform Nvidia over the next five years. Should you invest $1,000 in Advanced Micro Devices right now? Before you buy stock in Advanced Micro Devices, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Advanced Micro Devices wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,010,880!* Now, it's worth noting Stock Advisor 's total average return is1,047% — a market-crushing outperformance compared to180%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 7, 2025 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Geoffrey Seiler has positions in Alphabet. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Intel, and Nvidia. The Motley Fool recommends Broadcom and recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.
CTV News
36 minutes ago
- CTV News
Trade, tariffs top Chatham-Kent councillors talk with U.S. counterparts
Alysson Stoney, a councillor for the Municipality of Chatham-Kent speaks at a Great Lakes Regional Forum Meeting at the National Association of Counties annual conference in Philadelphia, Pa., on July 12, 2025. (Source: Federation of Canadian Municipalities) A representative from the Municipality of Chatham-Kent was part of a Canadian delegation in Philadelphia talking trade, tariffs, and other matters with U.S. counterparts. Alysson Storey, a councillor for Chatham-Kent, is the vice-chair of the Ontario Caucus for the Federation of Canadian Municipalities (FCM). Storey was part of the FCM team attending the annual conference for the National Association of Counties over the weekend, which consists of more than 2,000 officials from counties across the U.S. 'If we can learn from the solutions and the challenges they're working on here in the U.S. or vice versa, that benefits all of us,' Stoney said on Saturday. Speaking to CTV News from the conference, Storey said the meetings and presentations are an opportunity to speak about challenges facing municipalities in both countries. 'What is clear, especially with states that are close to the Canadian border, they're very aware of the tariff impacts,' Storey explained. 'They're already seeing it in manufacturing and agriculture, in border crossings and tourism.' Ties between Canada and the U.S. have been precarious due to a changing trade landscape, largely fuelled by tariffs levied by U.S. President Donald Trump. On Thursday, Trump announced a 35 per cent tariff on Canadian imports starting Aug. 1. Similar to upper levels of Canadian Governments, Storey said their messaging remains tariffs will hurt economies on both sides of the border. 'As the government of proximity, local governments, both here in the states and in Canada, we're the first ones to see impacts on jobs, we're the first ones to see impacts of factory closures, the first ones to see impacts on tourism,' Storey explained. FCM representatives began a larger dialogue with their U.S. counterparts earlier this year to discuss ongoing challenges. Storey planned to speak as part of a forum for states around the Great Lakes, as well as talks on rural affairs and agriculture. 'The agriculture piece is huge,' she said. 'That is our primary economic driver in our community as it is in a lot of southwestern Ontario, so farmers have issues with the trade concerns.' The FCM delegation planned to return home on Sunday.
Globe and Mail
an hour ago
- Globe and Mail
Trump threatens 35% tariffs, Quebec braces for copper levies and a generic Ozempic is coming to Canada: Business and investing stories for the week of July 13
Getting caught up on a week that got away? Here's your weekly digest of The Globe's most essential business and investing stories, with insights and analysis from the pros, stock tips, portfolio strategies and more. U.S. President Donald Trump said Thursday he would impose 35-per-cent tariffs on Canadian imports starting Aug. 1. In a letter addressed to Prime Minister Mark Carney posted on Truth Social, Mr. Trump justified the levies – which don't apply to goods that comply with continental free trade agreement rules – as an effort to force Canada to do more to address U.S complaints about fentanyl trafficking and illegal migration (A recent Globe and Mail investigation found that the Trump administration is using misleading fentanyl figures to justify tariffs against Canada.) Mr. Carney defended Canada's record in a social media post, saying the country has 'made vital progress to stop the scourge of fentanyl' in North America. He added that Canada is looking after its interests too by reducing internal barriers to trade and planning big economic projects, and is working towards a revised deadline of Aug. 1 in reaching a new trade deal with the U.S. Earlier in the week, Mr. Trump said he would also impose a 50-per-cent tariff on copper and 200 per cent on pharmaceuticals – potentially piling even more pressure on a Canadian economy reeling from levies on aluminum, steel and autos. U.S. telehealth platform Hims & Hers Health Inc. plans to enter the Canadian market in the new year by selling generic forms of the blockbuster weight-loss and diabetes drugs Ozempic and Wegovy. It is among the first companies to publicize efforts to take advantage of the Canadian patents on those drugs expiring in January, 2026. As Chris Hannay reports, Ozempic, which is by far the best-selling drug in Canada, contains the active ingredient semaglutide and generic versions of that ingredient will sell at a fraction of the cost of the brand-name version. Hims & Hers said it will work with another company that is producing the drug, while also providing '24/7″ patient access to licensed providers through its digital health platforms. The company did not name the manufacturer, but four have so far applied to Health Canada for approval to make generic semaglutide, including Apotex Inc. and Sandoz Canada Inc. When the patent for Ozempic expires on Jan. 4, 2026, Canada will be the first major market in the world for generic versions of the drug. Donald Trump's proposed 50-per-cent tariff on all copper entering the U.S. will disproportionately hit Canada. The U.S. is a major market for Canadian copper exports, accounting for $4.8-billion, or 52 per cent, of all the country's exports of the metal in 2023, according to Natural Resources Canada. Canada is America's second-largest source of imported copper after Chile. Copper is widely used in everything from construction to automobiles to appliances. The levy, which is set to kick in on Aug. 1, will fall heaviest on Central Canada – in particular, Quebec. Quebec accounts for most of Canada's U.S. copper shipments though The impact of the tariff on jobs in Quebec, home to Canada's sole copper smelting facility and a major copper refinery, is still unclear. Jason Kirby takes a closer look at the numbers in this week's Decoder series. Canadian downtowns still haven't recovered from the COVID-19 pandemic, according to new data. New data from the Toronto-based analytics company Environics Analytics shows foot traffic in the downtown cores across Canada is still approximately half of what it was before the pandemic. As of April, foot traffic in downtown Toronto is about 43 per cent less than what it was in January, 2020, while that number hovers at approximately 50 per cent for both Montreal and Vancouver. Despite the slow rebound, major employers are now pushing to bring their white-collar work force into the office more frequently. Three of Canada's biggest banks – Royal Bank of Canada, Bank of Montreal and Bank of Nova Scotia – recently announced new rules that ramp up in-office days. But whether these more demanding return-to-office mandates point to a full rebound for Canada's downtowns remains to be seen, Vanmala Subramaniam reports. Expensive housing is pushing a growing number of Canadians into buying their first home later in life – into their 40s and beyond, a time traditionally used to save for retirement. The average age of a first-time homebuyer in Canada is now just under 35, and homeownership among the 25- to 34-year-old set has been steadily declining. And while the under-35 group still makes up the largest share of first-time buyers today, the over-35 demographic keeps creeping higher, rising at a faster rate across the country. So what are they doing in the meantime? They're building stable careers, prioritizing travel, saving for down payments and in some cases, starting families. Zahra Khozema spoke to various Canadians who bought in their 40s and 50s about the decisions to buy their first homes later in life. Get the rest of the questions from the weekly business and investing news quiz here, and prepare for the week ahead with The Globe's investing calendar.
