I have been holding Annaly Capital (NYSE:NLY) for years. I have analyzed the name from many different angles over the years, but at the end of the day this is an income name, plain and simple. As an income play, one of the strong positives in this name is that the stock has mostly traded sideways in recent quarters. What this means is that you are relying on the dividend payout, and that is the crux of today’s piece.

While there is pressure to constantly follow the ups and downs in your holdings day to day, I contend that investors should take a longer-term approach. Higher rates bode well for the mREITs, but in the short term, rate movements could introduce volatility. Stay the course, and don’t worry about the day to day. From a longer-term perspective, what we need to be concerned with are total returns and dividend coverage.

First, we should discuss dividend coverage. As we saw in the recently reported Q4 earnings, Annaly’s performance was better than I expected, and it was a bit above analyst estimates. Annaly’s core earnings, excluding any premium amortization adjustments, came in at $0.30 per share. What is important to note is that this is perfect coverage of the $0.30 dividend. As I have said before, for the dividends to be secure moving forward, we need…….READ MORE

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