Key Takeaways Annaly shares have risen 10.3% in 1H25, outperforming its industry and key peers.Diversified portfolio in Agency MBS, MSRs and residential credit supports stable returns.NII surged to $493.2M in 1H25 from $47.1M a year ago on improving loan demand.In the first half of 2025, Annaly Capital Management (NLY) shares have gained 10.3% compared with the industry’s rise of 5.1%. It has also outperformed its peers AGNC Investment (AGNC) and Arbor Realty Trust (ABR) over the same time frame. AGNC Inves ...

Welcome to another great article about the mortgage REITs and BDCs. We’re going to touch on a handful of shares in the sector and provide some quick thoughts on each. Annaly Capital Management Preferred Shares We will start with the Annaly Capital Management (NLY) preferred shares. There are four of them. I’m not thrilled with the valuation. NLY-F and NLY-I both have a materially negative yield to call. NLY-G has a positive yield to call, but the floating yield is only 8.73%. That’s lower than the yield on ...

Core Viewpoint - Annaly Capital Management offers a high dividend yield of 13%, but it is not a reliable income investment and should be considered as part of a diversified portfolio focused on total returns rather than income generation [2][10]. Group 1: Dividend Yield and Investment Reliability - Annaly Capital's dividend yield is significantly higher than the S&P 500's 1.2% and the average REIT's 3.9% [2]. - The volatility of Annaly's dividend and its stock price tends to move in tandem, indicating that long-term investors may end up with reduced income and capital [4]. - The nature of Annaly as a mortgage REIT complicates its income reliability, as the yield is affected by mortgage repayments and market dynamics [5]. Group 2: Total Return Focus - Annaly Capital aims for attractive total returns rather than consistent income, making it essential for investors to reinvest dividends to benefit fully [7]. - The total return of Annaly is comparable to that of the S&P 500 over time, but with a different return profile, making it a valuable addition to a diversified asset allocation portfolio [8]. - Including Annaly in a portfolio can provide returns that are not directly correlated with stock market performance, enhancing overall portfolio returns [9]. Group 3: Investment Complexity - Annaly is more complex than traditional property-owning REITs, which may deter income-focused investors despite its high dividend yield [10].

Key Takeaways NLY reported Q2 adjusted EAD of 73 cents per share, beating estimates and rising 7.4% year over year.Net interest income rose to $273.2M from $53.6M, driven by increased loan demand and lower mortgage rates.NLY's 2025 earnings outlook was raised, supported by tightening spreads and improving asset prices.Annaly Capital Management, Inc. (NLY) second-quarter 2025 adjusted earnings available for distribution (EAD) per average share of 73 cents topped the Zacks Consensus Estimate by 1.4%. The figu ...

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________ TO _________________ COMMISSION FILE NUMBER: 1-13447 ANNALY CAPITAL MANAGEMENT INC (Exact Name of Registrant as Specified in its Charter) Maryland 22-347 ...

Core Insights - Annaly Capital Management (NLY) reported second-quarter 2025 results with earnings exceeding the Zacks Consensus Estimate, demonstrating resilience amid tariff-related uncertainties and mortgage market volatility [1][4] - The company achieved a positive economic return of 0.7% for the seventh consecutive quarter, supported by its agency, residential credit, and mortgage servicing rights strategies [3] Financial Performance - The average yield on interest-earning assets was 5.42%, an increase from 5.17% in the prior-year quarter [1] - The average net interest spread rose to 1.47% from 1.24% year-over-year, while the net interest margin was 1.71%, up from 1.24% in the same quarter of 2024 [2] - Net interest income (NII) surged to $273.2 million in Q2 2025, compared to $53.6 million in the prior-year quarter [6] - Book value per share decreased to $18.45 as of June 30, 2025, down from $19.25 a year earlier [3] Market Conditions - The Federal Reserve's interest rate cuts have led to a slight decline in mortgage rates, with the average 30-year fixed-rate mortgage at 6.74% as of July 24, 2025, down from 6.78% a year prior [5] - Housing affordability challenges are easing, contributing to increased loan demand, which positively impacted NLY's financials [6] Portfolio Strategy - Annaly's diversified capital allocation includes residential credit, mortgage servicing rights, and agency mortgage-backed securities, totaling an investment portfolio of $89.5 billion [8][10] - The company is focusing on acquiring newly originated mortgage servicing rights to enhance its MSR business, which tends to increase in value as interest rates rise [11] Dividend Profile - Annaly has a strong dividend yield of 13.5%, significantly higher than the industry average of 12.4%, with a payout ratio of 99% [14][17] - The company raised its dividend by 7.7% in March 2025, reflecting confidence in its cash flow and growth prospects [17] Stock Performance - Over the past six months, Annaly shares have increased by 8.4%, outperforming the industry average of 2.8% and peers like AGNC Investment and Arbor Realty Trust [20][21] - The Zacks Consensus Estimate indicates substantial year-over-year growth in sales of 463.4% for 2025 and 29.2% for 2026 [24] Investment Outlook - Annaly is positioned to deliver stable, risk-adjusted returns due to improving interest spreads, a diversified portfolio, and solid liquidity reserves [30] - The company is trading at a forward P/E multiple of 6.97X, lower than the industry average of 7.98X, suggesting an attractive valuation [31]

Core Insights - Annaly Capital Management, Inc. (NLY) reported second-quarter 2025 adjusted earnings available for distribution (EAD) per average share of 73 cents, exceeding the Zacks Consensus Estimate of 72 cents and up from 68 cents in the same quarter last year [1][9] - The average yield on interest-earning assets improved to 5.42% from 5.17% year-over-year, while the net interest spread increased to 1.47% from 1.24% [3][9] - The company's book value per share (BVPS) declined to $18.45 from $19.25 year-over-year, raising concerns about its financial health [4][9] Financial Performance - Net interest income (NII) for the quarter was $273.2 million, missing the Zacks Consensus Estimate by 33.5%, compared to $53.6 million in the prior-year quarter [2] - Total assets at the end of the second quarter reached $112.1 billion, reflecting a 6.7% increase from the previous quarter [2] - The economic capital ratio decreased slightly to 14.3% from 14.4% year-over-year [4] Key Ratios - The average economic costs of interest-bearing liabilities rose to 3.94% from 3.90% in the prior-year quarter [3] - The weighted average actual constant prepayment rate increased to 8.7% from 7.4% year-over-year [4] - Economic leverage remained stable at 5.8X as of June 30, 2025, unchanged from the previous year [4] Return Metrics - Annaly generated an annualized EAD return on average equity of 14.86% in the second quarter, up from 13.36% in the same quarter last year [5]

Financial Data and Key Metrics Changes - The book value per share decreased by 3% from the prior quarter to $18.45, while earnings available for distribution per share increased by $0.01 to $0.73, exceeding the dividend for the quarter [20][21] - The economic return for Q2 was 0.7%, marking the seventh consecutive quarter of positive economic returns, with a year-to-date economic return of 3.7% and total shareholder return exceeding 10% [9][20] - The investment portfolio yield increased to 5.41% from 5.23% in the prior quarter, while average repo rates decreased to 4.53% [21][22] Business Line Data and Key Metrics Changes - The Agency portfolio's market value rose to nearly $80 billion, a 6% increase quarter-over-quarter, with a $4.5 billion growth in notional terms [10][11] - The residential credit portfolio remained stable at $6.6 billion in market value, with Onslow Bay achieving record securitization activity of $3.6 billion across seven transactions [13][14] - The Mortgage Servicing Rights (MSR) portfolio ended the quarter unchanged at $3.3 billion, with solid performance metrics including a three-month CPR of 4.6% and serious delinquencies unchanged at 50 basis points [17][18] Market Data and Key Metrics Changes - The U.S. economy is projected to grow at around 1% annualized for the first half of the year, with an unemployment rate of 4.1% [6][8] - Inflation is expected to run at the slowest level in the past three quarters, with the Fed anticipated to deliver two interest rate cuts in 2025 [7][8] - Agency MBS spreads widened by 5 to 10 basis points during the quarter, despite improvements in market sentiment [9][10] Company Strategy and Development Direction - The company aims to maintain a strong focus on the agency sector while strategically growing its residential credit and MSR portfolios [18] - The management is optimistic about the agency sector fundamentals and potential catalysts for improvement, including GSE reform [12][18] - The company has diversified its funding sources significantly, enhancing liquidity and operational flexibility [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to cover and potentially out-earn the dividend for the remainder of the year, citing a conducive environment for achieving close to the dividend yield [28][29] - The company is well-positioned to navigate macroeconomic uncertainties, with a focus on managing rate risk and maintaining low leverage [34][40] - The outlook remains positive, with expectations for continued strong risk-adjusted returns in the current environment [18][19] Other Important Information - The company raised over $750 million of accretive capital in Q2, predominantly deployed in the agency sector, leading to a modest increase in leverage to 5.8 turns [9][10] - The MSR portfolio's valuation improved modestly due to a steepening yield curve and lower implied volatility [17][18] Q&A Session Summary Question: Update on book value quarter to date - The pre-dividend accrual book was up about 0.5%, indicating a 1.5% economic return [27] Question: Comfort level with the dividend - Management expressed confidence in covering the dividend, with expectations to out-earn it for the remainder of the year [28] Question: Managing the portfolio through volatility - The company maintained a good liquidity position and managed exposure carefully, allowing leverage to drift higher while focusing on rate risk [33][34] Question: Expectations for GSE reform - Management expects GSE reform to be prioritized, which could create opportunities for the company in the origination space [56] Question: Demand for Agency MBS - Demand from fixed income funds has been strong, with expectations for MBS spreads to tighten even without additional demand from banks [75][76] Question: Outlook for residential credit issuance - The company anticipates robust issuance in the second half of the year, tracking to be the highest since 2021 [81] Question: Impact of tariffs on inflation - Management acknowledged that inflation will pass through due to tariffs, but they remain optimistic about achieving the expected Fed cuts [92][96]

Financial Data and Key Metrics Changes - The book value per share decreased by 3% from the prior quarter to $18.45, while earnings available for distribution per share increased by $0.01 to $0.73, exceeding the dividend for the quarter [19][20] - The economic return for Q2 was 0.7%, bringing the year-to-date economic return to 3.7% [7][20] - The net interest spread excluding PAA increased to 1.47% in Q2 compared to 1.24% a year ago, and the net interest margin excluding PAA was 1.71% in Q2 compared to 1.58% in Q2 2024 [21] Business Line Data and Key Metrics Changes - The Agency portfolio ended the quarter at nearly $80 billion in market value, up 6% quarter over quarter, with a growth of approximately $4.5 billion in notional terms [9][10] - The residential credit portfolio remained relatively unchanged at $6.6 billion in market value, with Onslow Bay achieving its highest quarterly securitization activity to date, closing $3.6 billion across seven transactions [12][13] - The MSR portfolio ended the quarter unchanged at $3.3 billion in market value, with solid fundamental performance and a three-month CPR of 4.6% [15][16] Market Data and Key Metrics Changes - The U.S. economy is expected to grow around 1% annualized for the first half of the year, with an unemployment rate marginally lowered to 4.1% [5][6] - Inflation is likely to have run at the slowest level in the past three quarters, with the Fed expected to deliver two interest rate cuts in 2025 [6][7] - Agency MBS spreads widened by 5 to 10 basis points on the quarter, despite a positive reversal in sentiment towards risk assets [7][9] Company Strategy and Development Direction - The company remains optimistic about the agency sector, citing sound fundamentals and potential catalysts for improvement in Agency MBS technicals [11] - The focus is on further building out flow servicing relationships and expanding subservicing and recapture partnerships to capitalize on MSR opportunities [17] - The company plans to strategically grow its residential credit and MSR portfolios while maintaining a flexible investment approach with low leverage and ample liquidity [17] Management's Comments on Operating Environment and Future Outlook - Management noted that the macroeconomic environment has shown resilience, with a balanced labor market and muted layoffs, affirming the Fed's wait-and-see stance [5][6] - The company expects to be overweight in agency investments due to historically attractive spread levels, while also anticipating growth in residential credit and MSR portfolios [17] - Management expressed confidence in covering and potentially out-earning the dividend for the remainder of the year, given the current economic return [27][28] Other Important Information - The company raised over $750 million of accretive capital in Q2, predominantly deployed in the agency sector, with leverage increasing modestly to 5.8 turns [8] - The company has diversified its funding sources significantly, with non-mark-to-market capacity growing from $150 million to $1.9 billion [22][23] Q&A Session Summary Question: Update on book value quarter to date - The book value was up about 0.5% pre-dividend accrual, indicating a 1.5% economic return [26] Question: Comfort level with the dividend - Management expressed confidence in covering the dividend, expecting to out-earn it for the remainder of the year [27][28] Question: Managing the portfolio through volatility - Management was comfortable allowing leverage to rise due to a strong liquidity position and focused on managing rate exposure [32][34] Question: Dynamics of the credit portfolio - The quality of the credit portfolio is high, with proactive measures taken to tighten credit standards [45][46] Question: Expectations for GSE reform - Management expects GSE reform to be prioritized now that the tax bill is completed, which could create opportunities for the company [56] Question: Demand for Agency MBS - Demand from fixed income funds has been strong, and the company expects MBS spreads to tighten even without additional demand from banks [76][77]