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Impact of Share Buyback on Annaly Capital

Annaly Capital Management, Inc. (NLY) announced that its Board of Directors has authorized the repurchase of up to $1.5 billion of its outstanding common shares over a 12 month period.  Annaly currently has 975 million shares outstanding with a market cap of $15.59 billion.  The buyback is 9.62% of the current market cap.

Based on FY 2013 earnings projections, the buyback will have an EPS accretion of 10.64%.  By adding the accretion with the current dividend yield of 12.5% the total return will be 23% without changing the PE ratio.  It will be hard to find a better high yield investment with this type of potential.

Zacks Investment has Annaly rated as neutral or hold with a 12-month price target of 18.30.  The target price is 15.6% higher than the current market price.

The current low interest rate environment has reduced potential investment returns, only partially offset by low short-term funding costs.  Prepayment rates on residential mortgages have also recently increased as agencies complete programs to repurchase delinquent mortgages and stabilize housing markets.  As a result, we expect net interest margins to narrow moderately over the next 12 months. Longer term, we think Annaly’s conservative financial posture places it in a strong position to expand its portfolio of agency mortgage backed securities once investment markets become more attractive. We think Annaly can augment investment income with higher fees from an expanding portfolio of assets under management for third parties.

Q3 earnings are expected to be announced after market hours on October 29, 2012.  Investors should hold up new purchases until the Q3 results.

Here is a link to the best mortgage REITs for the next quarter.

Buy This Stock for a 16% Dividend Yield

New York Mortgage Trust (NYMT) has priced its underwritten registered public offering of 13.5 million shares of common stock at a public offering price of $6.89 per share.  Currently the shares are trading at $6.46 so investors can buy the stock below the IPO price.  One of the best times to buy shares is when they sale shares to raise funds.  Typically, the stock price will sell off when new shares are made public creating a cheaper buying price.

New York Mortgage will report Q3 earnings on October 30.  The Company reported Q2 net income attributable to common stockholders of $5.1 million, representing net income per weighted average share of $0.34 for the quarter ended June 30, 2012, as compared to$4.2 million of net income attributable to common stockholders and net income per weighted average share of $0.44 for the quarter ended June 30, 2011.

New York Mortgage has a current dividend yield of 16%.  The dividend was increased 8.0% in Q2 2012.  On September 18, 2012 the board of directors at New York Mortgage Trust approved a dividend of $0.27 per share.

Here are the recent analyst actions:

On October 1, 2012 Thomson Reuters/Verus upgraded NEW YORK MORTGAGE TRUST INC NEW from SELL to BUY.

On September 28, 2012 Ativo Research upgraded NEW YORK MORTGAGE TRUST INC NEW from FAVORABLE to MOST FAVORABLE.

New York Mortgage has an equity summary score of 9.8 out of 10 for a VERY Bullish outlook.  First Call analysts have a BUY recommendation with a 2.0 rating.

New York Mortgage has a 12-month price target of $8.

Investments That Can Provide Monthly Income

If you want to attain financial success and become debt free at the same time, you can plan t invest your money in any one of the different investment vehicles. As a result of the recession people have been suffering debt problems and income problems too. So, if you want to become debt free, you can try different investments.

Different investment vehicles

The different types of investment vehicles are:

  1. Real estate investment – If you want to generate monthly income, you can use your real estate property to do that. You can give out your property on rent or lease in order to generate a monthly income. This investment helps you to both build up wealth and pay off your debts. The other types of real estate investments are the Real Estate Investment Trust (REIT), investment groups, and trading.
  2. Stock investment – If you want to become debt free, you can invest you money in stocks. Stocks, known as shares, are small portions of a company which you are allowed to buy. This helps you to own a part of the company. There are mainly two stock types – preferred and common shares. The people who invest in preferred shares do have a higher standing than those who invest in common shares.
  3. Investment in Forex trading – Of late, Forex trading has gained popularity with most of the investors. This is mainly because it offers numerous benefits. Forex trading involves the exchange of the currency of one country with that of the other. Forex trading is an international business and it does not fall under any physical boundary. Moreover, the trade in Forex trading continues for 24 hours of the day. More and more number of people are wanting to invest in the Forex market, because it gives them ample scope to earn money monthly.

You can also invest through savings and checking accounts and buy bank mutual funds. There are various kinds of mutual funds like gold funds, stock mutual funds, global mutual funds, money market funds, bond mutual funds, and real estate investment trusts.

Whichever kind of investment vehicle you choose, you should keep in mind that if you really want to get money from your investments, you will have to invest strategically. Only then will you be able to get good return on your investments and use the money to become debt free. Otherwise, your debt problems may increase all the more if you lose money on your investments.

Guest post by Angela Brown

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