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France Telecom SA (ADR) (FTE), Annaly Capital Management, Inc. (NLY): Are These Dividend Companies Financially Strong?

MBS sales followed with acquisition to enter new market

Annaly Capital Management, Inc. (NYSE:NLY) recently completed the acquisition of Crexus Investment for about $872 million. The shareholders of Crexus will receive $13.05 per share they hold. Receiving nearly $2 billion a month in the form of principle repayments, funding this deal wasn’t difficult for Annaly Capital Management, Inc. (NYSE:NLY). The deal is a good one for Annaly Capital Management, Inc. (NYSE:NLY) as it has added assets worth nearly $1 billion of commercial real-estate MBS. This market is expected to grow by 40%, compared to the previous year.

Annaly Capital Management, Inc. (NYSE:NLY) sold $17 billion worth of mortgage-based securities, or MBS, in the first quarter of 2013, leading to gains of $182.2 million. This has shrunk its portfolio by 13% to $108.2 billion quarter over quarter. The U.S. Federal Reserve is purchasing around $40 billion MBS per month.  As it intends to lower the pressure on interest rates, normalizing and encouraging mortgage markets, in an attempt to sustain recovery in home prices. This activity is expected to continue at least until the year’s end. Looking at the historical gains of $80.3 million and $122.2 million in the first and last quarters of 2012, investors can expect continued growth going forward.

Focusing growth, through dividends

VimpelCom Ltd (ADR) (NYSE:VIP) is planning to focus on developing a 3G network, along with launching 4G LTE services in seven different regions in Russia. It will raise its capital expenditure to 22% of the revenue for 2013, compared to previous year’s 18%. VimpelCom Ltd (ADR) (NYSE:VIP) will mainly focus on nine regions of Russia, which equate to 60% of its revenue. This year, the company will increase 22% of 3G base stations of which 80% will have high speed internet by the end of 2013. It will focus on the development of 3G, or HSPA+, this year.

VimpelCom has invested $470 million on its LTE network. Its also testing a 4G network. has also built a 4G network that will be launched in Moscow during the fourth quarter of 2013. Its major focus in 2014 will be its 4G network. VimpelCom, being one of the top three telecom companies in Russia, is sure to benefit.

VimpelCom has a solid track record of dividend payments. Since 2011, the company has paid total dividends of $4.5 billion, which includes the extraordinary dividend paid in May 2013 worth $1.4 billion. VimpelCom aims at paying continuous dividends, of $0.80 per share, despite some inevitable dilution. In fact its dividend per share is expected to increase from $0.80 to $1.59 by the end of 2013. It posted cash deposits of $5.8 billion, of which $2 billion was utilized to pay dividends, in May 2013. With such cash flow, investors can expect timely dividends for years to come.


France Telecom SA (ADR) (NYSE:FTE) has come up with competitive tariff plans and a cost savings plan. To date, it has a dividend yield of 14.80%, making it a popular investment.  With the acquisition of Crexus, Annaly Capital Management, Inc. (NYSE:NLY) has come to a strong position.  And with the added benefit of new exposure to the commercial real estate market, it should be able to produce solid dividends in the future. VimpelCom has planned its Russian expansion well and should have a leg up on the competition.  It has a dividend yield of 14.10%, making it an investor friendly company.  All 3 businesses are financially strong and should be solid bets going forward.

The article Are These Dividend Companies Financially Strong? originally appeared on

Shweta Dubey has no position in any stocks mentioned. The Motley Fool recommends France Telecom (NYSE:FTE) (ADR). The Motley Fool owns shares of France Telecom (ADR). Shweta is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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