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]

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 ...

ANNALY CAPITAL MANAGEMENT, INC. REPORTS 2nd QUARTER 2025 RESULTS NEW YORK—July 23, 2025—Annaly Capital Management, Inc. (NYSE: NLY) ("Annaly" or the "Company") today announced its financial results for the quarter ended June 30, 2025. Financial Highlights Business Highlights Investment and Strategy Financing and Capital Corporate Governance • GAAP net income of $0.03 per average common share for the quarter • Earnings available for distribution ("EAD") of $0.73 per average common share for the quarter • Eco ...

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].