Annaly Capital Management (NYSE:NLY) is up 28 percent since it hit lows this past winter. As many shareholders are painfully aware, the dividends have been cut tremendously as the company’s earnings have fell. In turn, the stock has just plummetted. Recall that common dividends declared for the quarters ended March 31, 2014, December 31, 2013, and March 31, 2013 were 30 cents, 30 cents, and 45 cents per common share, respectively. The bleeding in dividends has stopped seemingly stopped. But the pain hasn’t been limited to just Annaly.
Two of Annaly’s main competitors, Javelin Mortgage Investment (NYSE:JMI) and American Capital Agency (NYSE:AGNC), have also faced pressure. Of the three, Javelin Mortgages’ share price and dividend have held up the best in the last eight months, with shares actually appreciating about 15 percent, while Annaly and American Capital are flat to down in that time frame. Javelin Mortgage’s dividend has been maintained since its once and only cut last fall, whereas Annaly and American Capital had multiple cuts throughout the year as rising interest rates and reduced Federal Reserve purchases weighed heavily.
However, interest rates have pulled back substantially from the 3 percent mark in 2014, and I suspect this will translate to strong reports from Javelin Mortgage, American Capital, and Annaly. Of the three, Javelin and Annaly are the best two to buy. I suspect, however, that Annaly’s share price has some room to run to catch up to Javelin.