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].

Core Insights - The article provides a comprehensive market analysis of Annaly Capital Management Inc., focusing on its investment strategies and market performance [1] Group 1: Company Overview - Annaly Capital Management Inc. is a leading mortgage real estate investment trust (REIT) that primarily invests in mortgage-backed securities [1] - The company has a diversified portfolio, which includes agency and non-agency mortgage-backed securities, as well as other financial assets [1] Group 2: Market Performance - Annaly's stock performance has shown significant fluctuations, influenced by interest rate changes and economic conditions [1] - The company reported a net income of $0.50 per share for the last quarter, reflecting a year-over-year increase of 10% [1] Group 3: Investment Strategies - The company employs a leverage strategy to enhance returns, with a current leverage ratio of 6.5 times [1] - Annaly is focusing on expanding its non-agency mortgage-backed securities segment to diversify its income sources [1] Group 4: Economic Impact - The ongoing economic recovery and changes in monetary policy are expected to impact Annaly's investment landscape positively [1] - Analysts predict that rising interest rates may lead to increased demand for mortgage-backed securities, benefiting the company's portfolio [1]

Core Insights - The article discusses the investment positions of analysts in specific companies, highlighting their long positions in NLY and AGNC [1]. Group 1 - Analysts have disclosed beneficial long positions in the shares of NLY and AGNC, indicating a positive outlook on these companies [1]. - The article emphasizes that the opinions expressed are personal and not influenced by any external compensation [1].

Core Insights - The article discusses the investment positions held by analysts in AGNC and NLY, indicating a beneficial long position in these shares [1]. Group 1 - Analysts express personal opinions on the investment landscape without receiving compensation from the companies mentioned [1]. - The article emphasizes that past performance does not guarantee future results, highlighting the inherent uncertainties in investment [2]. - It clarifies that Seeking Alpha does not provide personalized investment advice and that the views expressed may not represent the platform as a whole [2].

Core Viewpoint - Annaly Capital Management (NLY) is a prominent player in the mortgage REIT sector, but investing in its common stock presents significant issues [1] Investment Options - Investors interested in mortgage REITs should consider preferred shares, which are suitable for both risk-averse investors and those seeking higher returns for taking on more risk [2] - Annaly Capital offers several preferred shares, with NLY-F currently near a buy rating, priced at $25.49 [2] Preferred Shares Analysis - NLY-F is approximately $0.16 above the buy rating, with a target price that accounts for call risk [3] - If Annaly calls shares of NLY-F immediately after purchase, investors could lose about $0.15 per share, although the likelihood of this happening is not 100% [3] - The dividend for NLY-F may decrease next quarter due to forecasts for the Fed Funds Rate, which influences short-term rates and dividend rates [3] Rate Expectations - If the Federal Reserve is expected to cut rates multiple times, investors may find preferred shares less attractive [4] - Conversely, if only 1 to 2 rate cuts are anticipated, preferred shares may appear more appealing [4] Financial Ratios - Annaly has a strong common equity to preferred equity liquidation ratio of 6.81, which increases to 7.31 when considering market cap [5] - This ratio indicates a solid cushion for preferred shareholders in the event of liquidation [5] Investment Strategy - Mortgage REITs, including Annaly, are not ideal for risk-averse investors due to their inherent risks and should be treated as trading securities [7] - Annaly's common shares have seen substantial price increases, leading to a perception of being overpriced [7] Market Positioning - The market cap to preferred share value ratio helps assess whether a mortgage REIT is trading above or below book value, influencing investor sentiment [8] - Annaly's preferred shares, particularly NLY-F and NLY-I, are more likely to be called due to their higher dividends compared to other preferred shares [9] Alternative Options - NLY-J is another viable option for investors, offering comparable yields but trading at a premium to its base value [10] Conclusion - Annaly's common shares have limited upside potential after a strong performance, making them less suitable for long-term holding [11] - Preferred shares are recommended for long-term positions due to their solid income and lower volatility compared to common stock [11] - NLY-F is close to a buy rating, and investors should wait for a dip into the buy range before considering purchases [12]

Core Insights - Annaly Capital Management, Inc. (NLY) reported third-quarter 2025 adjusted earnings available for distribution (EAD) per average share of 73 cents, surpassing the Zacks Consensus Estimate of 72 cents, and an increase from 66 cents in the same quarter last year [1][9] - The average yield on interest-earning assets improved to 5.40%, contributing to a net interest margin of 1.70%, while the book value per share (BVPS) declined to $19.25 from $19.54 year-over-year [3][4][9] Financial Performance - Net interest income (NII) for the quarter 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 [2] - Total assets increased to $125.9 billion, reflecting a 12.2% rise from the previous quarter [2] - The net interest spread (excluding premium amortization adjustment) improved to 1.50%, up from 1.32% in the prior-year quarter [3] Key Ratios and Metrics - The economic capital ratio stood at 14.8%, an increase from 14.6% in the prior-year quarter [4] - The weighted average actual constant prepayment rate rose to 8.6%, compared to 7.6% in the year-ago quarter [4] - Economic leverage remained stable at 5.7X as of September 30, 2025 [4] Return Metrics - Annaly generated an annualized EAD return on average equity of 14.7%, up from 12.9% in the prior-year quarter [5] Market Outlook - The company's performance in the third quarter was bolstered by an increase in average yield and total assets, although the decline in BVPS raises concerns [6] - The financial market's uncertainty may pose challenges in achieving solid returns moving forward [6]