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].

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]