Financial Performance - Earnings available for distribution was $0.73 per average common share for Q2 2025[12] - The book value per common share was $18.45[12] - The economic return was 0.7% for Q2 2025 and 3.7% for the first half of 2025[12] Portfolio Composition and Strategy - The total portfolio was $89.5 billion, with $79.5 billion in Agency MBS, representing 89% of total assets and 62% of dedicated capital[12] - The Residential Credit portfolio remained relatively unchanged at $6.6 billion[12] - The MSR portfolio remained unchanged at $3.3 billion in market value, representing 19% of dedicated capital[12] Financing and Liquidity - Economic leverage was 5.8x, up from 5.7x in Q1 2025[12] - Total assets available for financing were $7.4 billion, including $4.7 billion of cash and unencumbered Agency MBS[12] Residential Credit Business - 15 residential whole loan securitizations totaling $7.6 billion in proceeds were priced year-to-date in 2025[12]

Annaly Capital Management (NLY) came out with quarterly earnings of $0.73 per share, beating the Zacks Consensus Estimate of $0.72 per share. This compares to earnings of $0.68 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +1.39%. A quarter ago, it was expected that this real estate investment trust would post earnings of $0.71 per share when it actually produced earnings of $0.72, delivering a surprise of +1.41%.Over the la ...

Financial Performance - GAAP net income of $0.03 per average common share for the quarter, down from $0.15 in the prior quarter [5] - Net income attributable to Annaly was $57.1 million for Q2 2025, down from $124.2 million in Q1 2025, indicating a decline of 54% [16] - Basic net income per share available to common stockholders was $0.03 for Q2 2025, down from $0.15 in Q1 2025 [16] - Comprehensive income attributable to common stockholders was $67.2 million for Q2 2025, down from $317.3 million in Q1 2025 [16] - The company reported a net loss on investments and derivatives totaling $289.5 million in Q2 2025, compared to a loss of $159.7 million in Q1 2025 [16] Earnings and Distributions - Earnings available for distribution ("EAD") of $0.73 per average common share, slightly up from $0.72 in the previous quarter [5] - Earnings available for distribution (EAD) for June 30, 2025, was $489,906,000, an increase from $461,857,000 in March 31, 2025, and $377,139,000 in June 30, 2024 [28] - Earnings available for distribution attributable to common stockholders for June 30, 2025, was $452,646,000, compared to $424,700,000 in March 31, 2025, and $339,981,000 in June 30, 2024 [28] - The company declared a dividend of $0.70 per common share for the quarter ended June 30, 2025, consistent with the previous quarter [19] Asset and Portfolio Management - Total portfolio valued at $89.5 billion, including $79.5 billion in highly liquid Agency portfolio, which increased by 6% [5] - Annaly's Residential Credit portfolio remained stable at $6.6 billion, with record securitization issuance of $3.6 billion during the quarter [5] - Total assets increased to $112.14 billion as of June 30, 2025, up from $105.12 billion in the previous quarter, representing a 1.2% growth [14] - Total securities increased to $73,500,626,000 as of June 30, 2025, up from $67,044,753,000 a year earlier [21] - The total investment portfolio reached $107,525,878,000 as of June 30, 2025, an increase from $90,325,407,000 in the same quarter of 2024 [21] Interest Income and Expenses - Net interest income for Q2 2025 was $273.2 million, a significant increase from $220 million in Q1 2025, reflecting a 24% quarter-over-quarter growth [16] - Interest income rose to $1.42 billion in Q2 2025, compared to $1.32 billion in Q1 2025, marking an 8% increase [16] - Economic interest expense for Q2 2025 was $947,828 thousand, up from $892,748 thousand in Q1 2025 and $806,470 thousand in Q2 2024 [45] - Economic net interest income (excluding PAA) reached $467,203 thousand in Q2 2025, compared to $436,656 thousand in Q1 2025 and $363,549 thousand in Q2 2024 [45] Leverage and Capital Structure - GAAP leverage increased to 7.1x from 6.8x in the previous quarter, while economic leverage rose to 5.8x from 5.7x [5] - Total liabilities reached $98.67 billion, up from $92.03 billion in the previous quarter, an increase of 7.2% [14] - Total GAAP debt as of June 30, 2025, was $95,758,694,000, an increase from $88,629,051,000 in March 31, 2025, and $80,339,332,000 in June 30, 2024 [39] - The company utilizes a mix of debt and equity funding to maintain its desired capital profile and support liquidity during market stress [36] - The company’s capital structure includes repurchase agreements, loans, and securitizations, which are essential for funding its investments [36] Economic Returns and Ratios - Economic return of 0.7% for Q2 2025, with a 3.7% economic return for the first half of the year [5] - The annualized GAAP return on average equity for the quarter ended June 30, 2025, was 1.82%, down from 4.04% in the previous quarter [19] - Economic capital ratio decreased to 14.3% as of June 30, 2025, compared to 14.8% as of March 31, 2025, and 14.4% as of June 30, 2024 [40] - Annualized EAD return on average equity for June 30, 2025, was 14.86%, up from 14.43% in March 31, 2025, and 13.36% in June 30, 2024 [28] Market and Investment Strategy - The company remains optimistic about opportunities across its three investment strategies, focusing on diversified housing finance portfolio for risk-adjusted returns [4] - The weighted average net rate on interest rate swaps at period-end was -1.33% as of June 30, 2025, compared to -2.17% a year earlier [19] - The hedge ratio was 92% as of June 30, 2025, down from 98% a year earlier [19]

Core Viewpoint - Annaly Capital Management offers a high dividend yield of over 14%, but its volatility and business model may not align with the expectations of income-focused investors [1][7][11]. Group 1: Company Overview - Annaly Capital Management operates as a mortgage real estate investment trust (REIT), purchasing pooled mortgages that are converted into bond-like securities, differing from traditional property leasing [2]. - The company has historically provided total returns that match the S&P 500 index, indicating its potential for diversification within investment portfolios [4]. Group 2: Investment Reasons - The first reason to consider investing in Annaly is its historical performance, which has kept pace with the S&P 500, suggesting it can add diversification benefits to a portfolio [4]. - The second reason is the recent increase in its dividend, which signals positive business performance and is often viewed favorably by dividend investors [5]. - The third reason is the potential for interest rate cuts, which could enhance the value of Annaly's mortgage bond portfolio, benefiting the company's overall performance [6]. Group 3: Cautionary Notes - Despite the attractive dividend yield, it has been historically volatile, with periods of significant reductions, which may not meet the expectations of income investors seeking stable dividends [8][10]. - The volatility of dividends is typical for mortgage REITs, indicating that investors relying on consistent income may find Annaly unsuitable for their needs [10][12]. - The mismatch between the high yield and the company's business model suggests that while Annaly may be a good fit for asset allocators, it may not be ideal for those focused on steady dividend growth [11][12].

Annaly Capital Management (NLY) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following yea ...

Core Viewpoint - Annaly Capital Management Inc. (NLY) is expected to report year-over-year growth in earnings and net interest income (NII) for the second quarter of 2025, with results anticipated on July 23, after market close [1][10]. Financial Performance - In the last reported quarter, Annaly posted earnings available for distribution per share of 72 cents, exceeding the Zacks Consensus Estimate, supported by improvements in the average yield on interest-earning assets [2]. - The consensus estimate for second-quarter NII is projected at $410.5 million, indicating a significant increase from the year-ago quarter's reported NII of $53.6 million [5]. - The Zacks Consensus Estimate for earnings remains unchanged at 71 cents, reflecting a year-over-year rise of 4.4% [11]. Market Conditions - Despite interest rate cuts by the Federal Reserve in 2024, mortgage rates remained stable in the mid-to-upper 6% range, leading to growth in refinancing activities and origination volumes [4]. - The primary-secondary spread averaged 1.06% in the second quarter of 2025, slightly lower than the first quarter's average of 1.12% [6]. Asset Management - A significant portion of NLY's mortgage-backed securities (MBS) holdings is expected to have experienced elevated levels of constant prepayment rates, positively impacting net premium amortization and supporting growth in interest income and average asset yield [5][10]. - The net servicing income consensus estimate of $121 million suggests a year-over-year increase of 13% [8]. Earnings Surprise History - Annaly has a strong earnings surprise history, beating the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 2.60% [3]. Earnings Prediction Model - The current model indicates that an earnings beat is unlikely for NLY this time, as it lacks the necessary combination of a positive Earnings ESP and a Zacks Rank higher than 3 [9].

Core Viewpoint - Annaly Capital offers a high dividend yield nearing 15%, but it may not be a reliable long-term investment compared to lower-yielding, growth-oriented companies like Agree Realty and PepsiCo [1][11]. Group 1: Annaly Capital's Business Model - Annaly Capital operates as a mortgage REIT, focusing on high dividend payouts, but this model relies on reinvesting dividends for strong total returns [2]. - Without reinvesting dividends, investors may face diminishing capital and income, leading to a shrinking portfolio value over time [4]. - The substantial dividends paid out are essentially a return of principal, making it difficult for Annaly to sustain its high yield in the long run [5][11]. Group 2: Alternatives to Annaly Capital - Agree Realty, with a dividend yield of 4.2%, has successfully doubled its property portfolio from about 1,200 to over 2,400 properties in five years, allowing for consistent dividend growth of approximately 5% annually [7][8]. - PepsiCo's stock has decreased by roughly 30% from its 2023 highs, resulting in a historically high dividend yield of around 4.3%. Despite current operating challenges, PepsiCo continues to focus on growth through acquisitions, maintaining a 53-year streak of annual dividend increases with a 7% annualized growth rate over the past five years [9][10].

Core Viewpoint - Annaly Capital Management offers a high dividend yield of over 14%, but its business model and volatility in dividends and stock price suggest it may not be suitable for traditional dividend investors [1][8][12]. Business Model - Annaly Capital operates as a real estate investment trust (REIT) that does not purchase physical properties but instead buys mortgages pooled into bond-like securities, which is a complex model not easily replicated by small investors [2][4]. - The company aims to profit from the difference between the interest earned on mortgage securities and its operational costs, including leverage costs, indicating a higher risk profile [4]. Market Dynamics - Mortgage securities traded by Annaly are subject to rapid value changes influenced by interest rates, housing market conditions, and mortgage repayment rates, making it challenging for most investors to monitor [5]. - The volatility in both the stock price and dividends has been significant, with the annual dividend showing a downward trend until its recent increase [8]. Investment Suitability - Mortgage REITs like Annaly are better suited for active and aggressive investors rather than traditional dividend investors, as the focus is on total return rather than consistent dividend income [6][12]. - While Annaly's total return has historically kept pace with the S&P 500, it does not provide a reliable income stream, which is a primary goal for many long-term dividend investors [11][12]. Portfolio Considerations - For investors focused on total return and diversification across asset classes, Annaly may be a suitable addition to their portfolio, provided they understand the importance of reinvesting dividends to achieve total return goals [11][13].

Core Insights - AGNC Investment Corp. (AGNC) and Annaly Capital Management (NLY) are leading players in the mortgage real estate investment trusts (mREITs) sector, both providing attractive long-term returns and substantial dividend yields, but differing in portfolio strategies and risk profiles [1] Capital Distribution & Dividend Yield - AGNC has a dividend yield of 15.34% with a payout ratio of 81%, but has not increased its dividend in the last five years [2] - NLY announced a cash dividend of 70 cents per share for Q1 2025, a 7.7% increase from the previous payout, with a current dividend yield of 14.37% and a payout ratio of 101% [3] - AGNC has a share repurchase plan authorizing up to $1 billion of common stock until December 31, 2026 [6] - NLY has a share repurchase program allowing for the repurchase of up to $1.5 billion of common stock until December 31, 2029, but has not executed any repurchases since its announcement [7] Business Model & Portfolio Diversification - AGNC focuses exclusively on agency mortgage-backed securities (MBS), which exposes it to volatility, while NLY employs a diversified capital allocation strategy that includes residential credit and mortgage servicing rights, reducing rate sensitivity [8][11] - NLY's diversified strategy is expected to contribute to long-term growth and stability, allowing it to capitalize on various market cycles [12] Interest Rate Sensitivity - AGNC is significantly affected by interest rate changes due to its concentrated agency MBS exposure, leading to increased borrowing costs and profit margin pressures [13][14] - AGNC's interest expenses surged from $75 million in 2021 to $2.9 billion in 2024, reflecting its vulnerability to rate hikes [15] - NLY's diversified portfolio allows it to better withstand interest rate volatility, resulting in lower increases in borrowing costs compared to AGNC [16] Benefits From Mortgage Rates - Both AGNC and NLY are expected to benefit from declining mortgage rates, with the average 30-year fixed-rate mortgage dropping from 6.95% to 5.80% year-over-year [19] - NLY is likely to see stronger book value appreciation due to tightening spreads in the Agency MBS market, while AGNC may benefit from increased refinancing activity [20][21] Earnings Estimates - AGNC's earnings estimates for 2025 and 2026 indicate year-over-year declines of 11.2% and 3.9%, respectively [22] - NLY's earnings estimates for the same period suggest year-over-year growth of 6.3% and 1.4% [25] Price Performance & Valuations - Over the past year, AGNC gained 12.6% and NLY rose 17.7%, outperforming the industry average of 8.6% [29] - AGNC trades at a forward price-to-tangible book (P/TB) multiple of 1.10X, while NLY trades at 0.99X, both above the industry average of 0.98X [31][34] Conclusion - NLY's recent dividend hike and diversified strategy position it as a more attractive option for long-term stability and growth compared to AGNC, which has faced challenges due to its concentrated agency MBS exposure [36][38]

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