A high dividend yield can be alluring. However, a sky-high payout is often a warning sign that the market believes the company won’t be able to maintain its dividend much longer. Because of that, investors need to be careful when buying stocks with big dividend yields.
Take Annaly Capital Management (NYSE: NLY) and Medical Properties Trust (NYSE: MPW). The real estate investment trusts (REITs) currently offer double-digit yields. Those big-time payouts are likely too good to be true. Here’s why investors shouldn’t fall for them.
Likely on the cutting board again
Annaly Capital Management currently yields more than 13%, about 10x the S&P 500‘s dividend yield. The mortgage REIT can currently afford its monster dividend. It recorded $0.68 per share of earnings available for distribution (EAD) during the fourth quarter, covering its $0.65 dividend outlay.
The REIT recently declared its next…
