ANLYAnnaly Capital Management Inc.

Annaly buys mortgage bonds with borrowed money and lives on the spread between rates.

This is not an owner of buildings but a holder of paper: the trust borrows short at a low rate and invests in long government-guaranteed mortgage bonds. The profit is the difference between what is received and what is paid, multiplied by leverage.

The risk here is not credit but interest rates: the guarantee protects against default, not against revaluation. When rates rise the portfolio's value falls while borrowing costs rise — both sides hit at once. Management comes down to choosing maturities and hedging, and the quality of that work only shows over a long stretch. Such a stock is therefore judged on net asset value rather than earnings, and the high dividend yield reflects risk rather than generosity.