With interest rates still at extremely low numbers, many investors are returning to dividend yielding stocks to add an additional boost to their portfolio. Like many, I am often tempted by these high yielders, such as Annaly Capital Management (NLY). However, just like any stock, they should not be taken at face value alone.

In some cases a stock can be an accidental high yielder. This happens when the price of a stock falls while the dividend payout remains the same. Typically, when this occurs, the company will need to adjust the dividend accordingly if earnings do not return to previous levels. One reassuring thing about Annaly is the beta is only 0.23, making the stock’s volatility very low. Barring any huge news, it is not likely that the price of the stock will suddenly venture too far in either direction. In addition to low volatility, Annaly is a real estate investment trust, meaning that the company is required to distribute 90% of taxable income to investors as dividends. The current yield of Annaly is 14%, which equates to a payout of $2.20 annually.

In the world of REITs, Annaly is not the only contributor. Between companies like CYS Investments (CYS), Capstead Mortgage (CMO), and Redwood Trust (RWT), investors have options to choose from. While Annaly Capital is arguably the most popular of the REITs, CYS Investments was the best in terms of profit for investors in 2011 with a dividend-adjusted return of 22.7%. The interesting thing about this is that before dividends, CYS returned only 3%. To continue reading, click here.