Going After Dividends

I've been following this stock literally for a few months and finally decided to buy some shares. I don't remember how I originally came across this stock, maybe in a magazine like Worth, Money, or Kiplingers. Anyhow, the first thing that caught my eye was the large dividend of just over 15%! That is a huge number and I was immediately intrigued, however stocks with large divideds can be tricky, so you need to do some due diligence before just jumping in.

As I stated, I have been watching this stock for the last few months and it has been trading in the $16 - $18 range. Since the interest rates are going to remain at low rates, this may be a stock that people such as myself get involved in.

Here are just a few bits of numbers that I have compiled as an example and of course are all based on timing and dividends earned:

* Buy 100 shares @ $18.00 = $1800.00
* If the price stays in that general range you are looking at approximately $270.00 in dividend payout for the year ($1,800.00 x 15% = $270.00).
* Even if the stock drops a couple of dollars, then you still come out on top due to the large dividend already received. This provides a bit of top cover for your initial investment.
* Say the stock drops to $16.00 now your investment is worth $1600.00 ($16.00 x 100 shares = $1,600.00)
* You already received the 15% dividend
* So you are still up $70.00 on the initial investment ($1800 - $1600 = 200 loss)
* But you received $270 in dividends, so ($270 - $200 = $70 profit or 3.88% gain)
* The gain received is still larger then you would get from an institution, so I veiw this as a well placed investment.

So can I get a drum roll.........The stock I have been talking about is Annaly Capital Management (NLY)