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Originally Posted by ErikLS2
Great point Greg, except if you're like me and all that applies except you need a new loan by March and they are basically NOT lending, unless you can prove you don't need the money!! 2-3 times the borrowed amount in net worth is what I'm hearing.
On another note, you still high on NLY? I haven't checked but I heard on the radio yesterday that their yield has gone down around 12 or so?
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Banks have come BACK TO -- everything is about the numbers... THAT was the way banks were all during my professional life. If your numbers don't make sense from a risk standpoint -- then they don't loan. That was the way it always was. Apartments? You need 40% EQUITY...
I like Annaly (NLY) only from a cash flow perspective... it is not a place for capital growth. And is very interest rate sensitive. THEY borrow to invest. If their costs of borrowing go up -- then the spread starts to go away. I own about 40,000 shares -- so not huge position (relative to my investments) but I like the dividend and it's been a good place to park cash. I have warned many many times -- that this is not a buy and forget stock... and I have warned many many times -- that we are in or approaching rapidly - a rising interest rate market. These kinds of stocks WILL suffer capital losses UNTIL the dividend rate is so compelling that it finds a base.
Year to date -- it's DOWN almost 11%.... so that's a result of rising interest rates. But as the share price goes down -- the dividend yield rises. At any point for any stock - that creates a floor for the price.
BTW -- The "EX date" for NLY is June 27th... and it pays .40 per quarter or 1.60 a year. I have about a 60K capital loss in the shares I own -- but -- Big Butt -- I pick up 16K PER QUARTER in dividend -- and the loss varies day to day... and I'm not selling so it's just paper at this point. I took a long term capital gain of around 40K earlier this year on the name... so between that and the dividend -- even with the current sucky position - I'm a winner (as of now). If it holds here -- I'm "even" by the end of the year on the current position. That's kind of the way I view this one.