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No. of Recommendations: 2
NLY, a stock and company I love, is not part of a "conservative" portfolio. That 14% yield comes with the understanding that one knows in the future the spread will shrink and perhaps invert, tumbling the dividend and causing a steep decline in the stock price. Farrell has proven adept at dancing the company thru those hard times, in part by limiting the leverage to "only" 8 to 12 times, and in part by employing a "dumbbell" strategy (read the 10K's for an explanation).

I buy NLY in my IRA every year, but I don't pretend that this is a conservative part of my portfolio.

RWS
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