Core Viewpoint - Annaly Capital Management reported third-quarter earnings that surpassed estimates, but experienced a decline in book value year-over-year, raising questions about future performance and market trends [2][5]. Financial Performance - Adjusted earnings available for distribution per average share were 73 cents, exceeding the Zacks Consensus Estimate of 72 cents and up from 66 cents in the same quarter last year [2]. - Net interest income (NII) was $275.8 million, which fell short of the Zacks Consensus Estimate by 38.3%, compared to $13.4 million in the prior-year quarter [3]. - The average yield on interest-earning assets improved to 5.40%, up from 5.16% in the previous year [4]. - The net interest spread increased to 1.50% from 1.32% year-over-year, while the net interest margin rose to 1.70% from 1.52% [4]. Asset and Capital Metrics - Total assets at the end of the third quarter were $125.9 billion, reflecting a 12.2% increase from the prior quarter [3]. - Book value per share (BVPS) decreased to $19.25 from $19.54 in the prior-year quarter [5]. - The economic capital ratio improved to 14.8%, up from 14.6% year-over-year [5]. - Economic leverage remained stable at 5.7X as of September 30, 2025 [5]. Returns and Estimates - The annualized return on average equity was 14.7%, an increase from 12.9% in the prior-year quarter [6]. - Estimates for the stock have been trending downward over the past month, indicating a potential shift in market sentiment [7][10]. Stock Performance and Outlook - Annaly has a poor Growth Score of F and a Momentum Score of D, with an aggregate VGM Score of F, placing it in the bottom 40% for value investors [8]. - The company holds a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the coming months [10].

Economic Overview - The economy is currently experiencing strong growth, with the Atlanta Fed estimating GDP at 4% [3] - Despite positive economic indicators, investor sentiment is dominated by recession fears, leading to a disconnect between market performance and investor behavior [2][3] Interest Rates and REITs - Historical trends indicate that rate cuts typically lead to bull markets for Real Estate Investment Trusts (REITs) [4][5] - The current economic environment, characterized by growth rather than contraction, suggests that the upcoming rate cut cycle could be particularly beneficial for REITs [5] Mortgage REITs (mREITs) Performance - Select mortgage REITs, particularly Annaly Capital (NLY), are positioned for significant payouts and price appreciation due to their holdings in government-backed mortgages [6][8] - NLY benefits from falling long-term interest rates, which increase the value of its mortgage portfolio [8] Annaly Capital's Strategy - Annaly Capital has a history of capitalizing on market volatility by purchasing high-quality agency mortgages when spreads widen [7] - The company has sufficient core earnings to cover its dividend, with potential for increased earnings as rate cuts improve its net interest margin [9] Investment Considerations - Not all mortgage REITs are equally positioned; Annaly's focus on guaranteed agency paper mitigates risks associated with lower-quality commercial mortgages held by other mREITs [9] - The current economic landscape creates distinct winners and losers, emphasizing the importance of selecting proven investment strategies [9]

Market Overview - The stock market is experiencing strong momentum, with investors actively buying, leading to indices remaining near all-time highs [1] - Current valuations are close to all-time highs, although not at the peak levels [1] Investment Strategies - The service led by Rida Morwa focuses on high-yield investment strategies, targeting a sustainable income with a safe +9% yield [2] - Features of the service include model portfolios with buy/sell alerts, preferred and baby bond portfolios for conservative investors, and regular market updates [2] Analyst Insights - Analysts involved in the service express personal opinions and have beneficial long positions in specific shares, indicating a vested interest in the performance of those stocks [3] - The service emphasizes community and education, promoting the idea that investors should not operate in isolation [2]

Core Viewpoint - Annaly Capital offers a high dividend yield of 12.9%, significantly higher than the S&P 500's yield of approximately 1.2%, but this does not guarantee a stable income stream for investors [2][8]. Company Overview - Annaly Capital operates as a mortgage REIT, which is distinct from traditional REITs that own physical properties. Instead, it invests in pooled mortgages that are converted into bond-like securities [3][4]. - The value of Annaly's business is primarily derived from the mortgage securities it holds, similar to a mutual fund, and it reports its tangible book value quarterly [5]. Dividend Characteristics - Annaly's dividend payments are highly variable and consist of both interest and principal repayment, leading to a gradual decline in the company's value over time [7][8]. - The company's dividend history shows significant volatility, indicating that it may not be suitable for investors seeking consistent and reliable income [8][12]. Investment Perspective - For total return-focused investors, Annaly may enhance portfolio diversification, as its long-term total return has kept pace with the S&P 500, despite differing stock performance [10][11]. - However, for dividend investors, Annaly may not meet expectations for a reliable and growing dividend, and spending dividends rather than reinvesting them could lead to disappointment [12].

Core Viewpoint - Annaly Capital Management offers a high dividend yield of 12.7%, significantly above the S&P 500's 1.2% and the average REIT's 3.9%, attracting dividend investors [1][12]. Company Overview - Annaly Capital Management operates as a mortgage REIT, which is distinct from traditional property-owning REITs that lease physical properties [3][4]. - The company invests in pooled mortgage securities, making its value dependent on the portfolio of these securities, similar to mutual funds [4]. Investment Strategy - Annaly employs aggressive leverage using its mortgage securities as collateral, aiming for durable risk-adjusted returns across various economic cycles [5]. - While dividends are a significant aspect, total return is the primary focus, necessitating the reinvestment of dividends for optimal performance [5]. Historical Performance - Annaly has historically provided solid total returns, slightly outperforming the SPDR S&P 500 ETF [7]. - However, both dividends and share prices have shown high variability and a downward trend over the past decade [9][10]. Recent Developments - The recent increase in dividends is positive, but it does not compensate for previous cuts, leading to reduced income and capital for investors who relied solely on dividends [10]. Market Position - Annaly's market capitalization stands at $15 billion, with a current stock price of $21.65 [11][12]. - The company may appeal more to investors focused on total return and asset allocation rather than those seeking consistent dividend income [12]. Investment Considerations - For dividend investors, reinvesting dividends and selling some stock to generate income may lead to lower total returns over time [13]. - Companies with a history of consistent dividend growth may be more suitable for income-focused investors compared to Annaly [14][15].

Group 1 - Investors are concerned about the inevitability of a future recession, although the timing remains uncertain [1] - Rida Morwa, with over 35 years of experience in investment banking, advises on high-yield investment strategies since 1991 [1] - The Investing Group High Dividend Opportunities aims for sustainable income through high-yield investments with a targeted safe yield of over 9% [1] Group 2 - The service includes a model portfolio with buy/sell alerts, preferred and baby bond portfolios for conservative investors, and regular market updates [1] - The philosophy of the service emphasizes community, education, and the importance of not investing alone [1]

Core Viewpoint - Annaly Capital Management, a mortgage REIT, offers a high dividend yield of 12.8%, attracting investor interest, but its dividend payments are volatile and influenced by interest rate changes [2][8]. Company Overview - Annaly Capital Management primarily invests in agency mortgage-backed securities (MBS), which constitute approximately 80% of its portfolio, along with non-agency residential mortgage loans and mortgage servicing rights [2][3]. - The company employs leverage to enhance returns, with a leverage ratio of 7.1 times equity as of September 30 [3][4]. Financial Performance - The company's third-quarter earnings available for distribution (EAD) increased to $0.73 per share, reflecting a 10.6% year-over-year growth [6]. - The annualized EAD return on equity was reported at 14.7%, up from about 13% a year prior [7]. Dividend Analysis - Annaly's current quarterly dividend is $0.70, which is covered by the last quarter's EAD [8]. - The dividend yield of 12.8% significantly exceeds the S&P 500 index yield of 1.2%, but the company's dividends have fluctuated, with quarterly dividends dropping from $0.88 in 2022 to $0.65 in the following year [8][11]. Market Context - The company's market capitalization stands at $15 billion, with a current stock price of $22.00 [10]. - Economic uncertainties, including inflation and potential interest rate changes by the Federal Reserve, pose risks to the company's performance and dividend stability [11].

Core Insights - Annaly Capital Management, Inc. (NLY) is recognized for its attractive dividend policy, offering significant long-term returns and a high dividend yield appealing to income-focused investors [1][2] Dividend Policy - NLY increased its cash dividend by 7.7% to 70 cents per share in March 2025, resulting in a current dividend yield of 13.02%, which exceeds the industry average of 12.51% [2] - The company maintains a payout ratio of 97%, demonstrating its commitment to regular dividend distributions [2] Shareholder Value Enhancement - Annaly Capital has authorized a stock repurchase program of up to $1.5 billion, set to expire on December 31, 2029, although no shares have been repurchased under this plan to date [4] Liquidity Position - As of September 30, 2025, NLY holds total assets available for financing of $8.8 billion, including $3.9 billion in cash and unencumbered Agency MBS, providing a strong liquidity cushion [5] Competitive Landscape - In comparison, AGNC Investment Corp. offers a higher dividend yield of 14.2% with a payout ratio of 94%, while Arbor Realty Trust has a yield of 12.6% and a payout ratio of 98%, but with a weaker liquidity position [6][7][8] Price Performance - Over the past year, NLY shares have increased by 11.6%, contrasting with a 2.6% decline in the industry [9] Valuation Metrics - NLY trades at a forward price-to-tangible book (P/TB) ratio of 1.07X, slightly above the industry average of 1.04X [13] Earnings Estimates - The Zacks Consensus Estimate indicates a year-over-year earnings rise of 7.4% for 2025 and 1.5% for 2026, with recent upward revisions for 2025 estimates and downward revisions for 2026 [15]

Group 1 - The article discusses the accessibility of 30-year loans at low interest rates for many Americans, highlighting the concept of "The American Dream" of homeownership [1] - Rida Morwa, a seasoned investment and commercial banker, has over 35 years of experience and focuses on high-yield investment strategies [1] - The Investing Group High Dividend Opportunities aims for sustainable income through high-yield investments, targeting a safe +9% yield [1] Group 2 - The service includes features such as a model portfolio with buy/sell alerts, preferred and baby bond portfolios, and regular market updates [1] - The philosophy of the service emphasizes community, education, and the belief that investors should not invest alone [1]

Financial Performance - Annaly generated earnings available for distribution of $0.73 per share, achieving an economic return of 8.1% for Q3 2025 and 11.5% year-to-date [184]. - Net income for Q3 2025 was $843.1 million, or $1.21 per basic common share, compared to $82.4 million, or $0.05 per share in Q3 2024 [212]. - Net interest income for Q3 2025 increased to $275.8 million from $13.4 million in Q3 2024, reflecting a significant improvement [212]. - Net servicing income for Q3 2025 was $126.3 million, up from $109.6 million in the same period last year [212]. - For the nine months ended September 30, 2025, net income was $1.0 billion, or $1.45 per share, compared to $538.7 million, or $0.80 per share in the same period of 2024 [213]. - Earnings available for distribution for Q3 2025 were $519.9 million, or $0.73 per average common share, compared to $382.5 million, or $0.66 per share in Q3 2024 [214]. - The annualized return on average equity for Q3 2025 was 23.69%, compared to 2.77% in Q3 2024 [215]. - Earnings available for distribution for the nine months ended September 30, 2025, were $1.5 billion, or $2.18 per average common share, compared to $1.1 billion, or $1.98 per average common share for the same period in 2024, reflecting a 36.4% increase in earnings [216]. Portfolio and Asset Management - The Agency MBS portfolio's market value increased by 10% quarter-over-quarter to $87.3 billion, supported by favorable macro conditions [185]. - The Residential Credit business's portfolio grew by $265 million to $6.9 billion in economic market value of assets, with record securitization volumes of $3.9 billion in Q3 2025 [190]. - The investment portfolio at period-end was $122.1 billion, up from $97.7 billion in the previous year [212]. - Total financial assets amount to $119.65 billion, with $82.26 billion in agency mortgage-backed securities [342]. - The portfolio composition as of September 30, 2025, includes 68.2% agency mortgage-backed securities and 27.5% residential mortgage loans [352]. Economic and Market Conditions - The U.S. economy showed resilience with a GDP growth forecast of 2.7% for Q3 2025, despite a government shutdown delaying data releases [197]. - Consumer spending growth tracked at 2.8% SAAR in Q3 2025, rebounding from 1.5% SAAR in the first half of the year [198]. - The housing market is experiencing slight negative home price appreciation, with continued pressure expected into the winter seasonals [192]. - Mortgage spreads tightened by 8 to 12 basis points relative to Treasury hedges during the quarter, with lower and intermediate coupons performing strongly [186]. Interest Rates and Leverage - The economic leverage decreased slightly to 5.7x, with cash and unencumbered Agency MBS totaling $5.9 billion [184]. - The Federal Reserve cut the target range for the Federal Funds rate by 25 bps to 4.00% - 4.25% in September 2025, with expectations of two additional cuts in 2025 [201]. - The 10-year Treasury yield ended Q3 2025 at 4.15%, down 8 bps from the previous quarter [202]. - The GAAP leverage at period-end was 7.1:1, consistent with the previous year [215]. - The economic leverage ratio indicates the use of capital coupled with borrowed funds to invest primarily in real estate-related investments, aiming for positive risk-adjusted returns [231]. Risk Management - The company utilizes interest rate swaps linked to SOFR to manage interest rate risk effectively [347]. - The company has continued to diversify its financing profile by adding new non-mark-to-market facilities and financing options under existing facilities for its Residential Credit operating segment [328]. - Liquidity stress testing is conducted to ensure sufficient liquidity under various market scenarios [343]. - The Cybersecurity Committee oversees cybersecurity risk management processes, including daily monitoring and escalation of issues as needed [362]. - The company closely monitors its REIT status and compliance with applicable regulations to mitigate compliance, regulatory, and legal risks [366]. Capital and Funding - Annaly raised approximately $1.1 billion of equity in Q3 2025, including $275 million from its first preferred stock issuance since 2019 [184]. - The company has authorized a new common stock repurchase program of up to $1.5 billion through December 31, 2029, replacing the previous program [302]. - The company issued 39.0 million and 102.0 million shares under the at-the-market sales program for proceeds of $823.3 million and $2.1 billion during the three and nine months ended September 30, 2025, respectively [306]. - The company reported a net fair value of ($21.2) million for interest rate swaps as of September 30, 2025 [294]. Operational Performance - G&A expenses increased to $148.4 million for the nine months ended September 30, 2025, up $21.0 million from the same period in 2024, primarily due to higher compensation and professional fees [273]. - The company has entered into Distribution Agency Agreements with various financial institutions, allowing for an aggregate offering price of up to $2.0 billion under the Current At-The-Market Sales Program [305]. - The company maintained liquid assets totaling $88.81 billion, representing 96.12% of the carrying amount of encumbered and unencumbered financial assets [336].