Real estate investment trust Annaly Capital Management’s (NYSE:NLY) higher-than-industry average dividend yield is undoubtedly attractive to dividend investors. However, will NLY be able to fund its high dividend payouts as the housing market slumps amid increasing inflation rates? Read more to find out.Mortgage real estate investment trust (REIT) Annaly Capital Management, Inc. (NLY) finances the purchase of residential and commercial real estate assets. The housing industry boom over the past year, coupled with increased investor attention on high-yield dividend stocks amid a volatile market, helped NLY’s share price to surge 32.2% over the past year, and 10.3% year-to-date.
However, current contradictory macroeconomic trends make NLY’s growth potential uncertain in the near term. While the Fed’s recent recommitment to hold the interest rates at near zero levels in the near term makes NLY a coveted stock due to its relatively higher dividend yields, rising commodity costs could continue to pressure the housing market.
Also, rising construction prices have caused homebuilder sentiment to slump to a 10-month low, driving a slump in the industry. Consequently, analysts expect NLY’s revenues and earnings to decline because the demand for loan assets and asset-backed securities are expected to fall.