Assessing Annaly Capital's Performance For Q2 2025

Core Insights - Annaly Capital (NYSE:NLY) had a normal quarter with minor changes, experiencing a slight decrease in the value of its assets, which was anticipated, and the stock is currently considered overpriced [1][15] Financial Performance - NLY recorded a minor quarterly book value (BV) decrease that aligned with expectations, with a total net valuation gain of $147 million during Q2 2025, outperforming the projected gain of $110 million [2][10] - Core earnings/EAD for NLY matched expectations with a slight increase compared to Q1 2025, driven by a larger on-balance sheet portfolio size [4][10] - The hedging coverage ratio decreased from 102% to 95%, which was anticipated, indicating a slight reduction in risk management strategies [3][6] Valuation Metrics - The reported GAAP BV per share was $18.45, slightly above the projected $18.35, reflecting a 0.54% outperformance [10] - The stock price is currently at $21.14, leading to a dividend yield of 13.25% and a payout ratio of 96%, indicating a high dividend relative to earnings [12] Market Position - NLY's performance in terms of BV decrease and core earnings increase is expected to outperform most agency mREIT peers, suggesting a relatively strong position in the market [5][14] - The company remains in a good position to maintain its quarterly dividend of $0.70 per common share, despite core earnings only slightly covering this amount [14]