Reflecting on the current rate cut projections, investing now in mortgage REITs can prove to be a very lucrative opportunity for income focused investors. The two largest ETFs in that industry are the VanEck Mortgage REIT IncomeI am a dynamic finance professional with a Master’s in Banking & Finance from Université Paris 1 Panthéon-Sorbonne. My investing background mix corporate finance, M&A, and investment analysis, with a focus on real estate, renewable energy, and equity markets. I specialize in financia ...

Market Analysis by covering: S&P 500, Chimera Investment Corporation, AGNC Investment Corp, Blackstone Mortgage Trust Inc. Read 's Market Analysis on Investing.com ...

Core Viewpoint - AGNC Investment offers a high dividend yield but lacks the reliability and consistency of dividends compared to Federal Realty Investment Trust, which is preferred for sustainable income generation [2][10]. Company Overview - AGNC Investment operates as a mortgage real estate investment trust (mREIT), focusing on portfolios of securities created by pooling mortgages, distinguishing it from property-owning REITs [3][5]. - Federal Realty Investment Trust is a landlord of strip malls and mixed-use developments, emphasizing quality over quantity with around 100 properties in prime locations [9]. Dividend Analysis - AGNC Investment has a history of volatile dividends and has previously cut its dividend, leading to concerns about its reliability for income investors [6][10]. - Federal Realty boasts a long history of increasing dividends, achieving over five decades of annual increases and earning the status of Dividend King, making it a more reliable choice for dividend income [9][10]. Investment Strategy - The focus of AGNC Investment is on total return, which may appeal to some investors, but it does not align with the needs of those seeking a consistent income stream [11]. - Federal Realty is positioned as a better option for investors prioritizing reliable and growing dividends, despite its lower yield of approximately 4.5% compared to AGNC's over 14% [10][11].

ACRES Commercial Realty (NYSE: ACR ) has been a remarkable compounder of wealth, in lieu of a dividend, over the last year as the mortgage REIT embarked on a sustained campaign of share buybacks that has slimmed its weighted average shares outstanding. This figureThe equity market is a powerful mechanism as daily fluctuations in price get aggregated to incredible wealth creation or destruction over the long term. Pacifica Yield aims to pursue long-term wealth creation with a focus on undervalued yet high-gr ...

Core Viewpoint - Annaly Capital Management, Inc. (NLY) has issued a new preferred share, NLY-J, which has seen a price increase from $24.90 to $25.53 shortly after trading began, reducing its initial appeal of potential price appreciation as it became more accessible to investors [1] Ticker Changes - The preferred shares transitioned from NNLYV to NNLYP and are now trading as NLY-J, with some brokers already adopting the new ticker [2] Dividend Accumulation - The dividend accrual is based on the ex-dividend date rather than the payment date, which can be confusing for investors; NLY-J shows a dividend accrual of $0.18 despite being newly launched, anticipating an ex-dividend date of 11/28/2025 [3][5][6] Yield to Call - The yield to call for NLY-J was approximately 8.9% at the initial coverage but has decreased to about 8.4% due to share price appreciation [7] Comparison with Baby Bonds - Baby bonds are available with yields around 9%, but NLY-J offers a better stripped yield compared to many fixed-rate shares, despite the potential for NLY to suspend preferred dividends [9][10][13] Interest Rate Impact - NLY-J has no maturity and offers fixed rates indefinitely, which could be a disadvantage if interest rates rise significantly; however, the forward yield curve suggests potential rate cuts [11][12] Predictions for NLY-J - If the Federal Reserve cuts rates without triggering a recession, NLY-J prices could exceed $26 within a year; otherwise, baby bonds may perform better in recession or rising rate scenarios [15][16]

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]

Core Viewpoint - AGNC Investment's recent earnings report indicates a decline in key financial metrics, raising concerns about future performance and potential pullback in stock value leading up to the next earnings release [1]. Financial Performance - The second-quarter 2025 net spread and dollar roll income per common share was 38 cents, missing the Zacks Consensus Estimate of 42 cents, and down from 53 cents in the same quarter last year [2]. - Adjusted net interest and dollar roll income was $457 million, a decrease of 5.2% year-over-year [2]. - The company reported a comprehensive loss per common share of 13 cents, remaining relatively flat compared to the previous year [3]. Key Metrics - Net interest income (NII) was $162 million, significantly missing the Zacks Consensus Estimate by 36.2%, while net interest expenses were $3 million in the prior-year quarter [4]. - The average asset yield on the portfolio increased to 4.87% from 4.69% year-over-year [4]. - The average net interest spread decreased to 2.01% from 2.69% in the year-ago quarter [5]. Balance Sheet and Portfolio - As of June 30, 2025, the tangible net book value per share (BVPS) was $7.81, down 7% year-over-year [6]. - The company's investment portfolio totaled $82.3 billion, including $73.3 billion in Agency mortgage-backed securities [7]. - Cash and cash equivalents were $656 million, a decline of 44.2% from the prior quarter [8]. Market Outlook - The stock has a poor Growth Score of F and a Momentum Score of D, with an aggregate VGM Score of F, indicating weak overall performance [11]. - AGNC Investment holds a Zacks Rank 4 (Sell), suggesting expectations of below-average returns in the coming months [12].

Financial Performance - GAAP Net Income was $102 million or $027 per share[11] - NAV-Based Total Return was 197% annualized[11] - Net Investment Income was $65 million or $017 per share[11] - Adjusted Net Investment Income was $66 million or $018 per share[11] - Net Asset Value was $2297 million or $612 per share as of June 30 2025[11] Investment Portfolio - The CLO portfolio grew by 27% to $3169 million as of June 30 2025 from $2499 million as of March 31 2025[11, 18] - CLO debt investments totaled $1489 million with 79% in the U S and 21% in Europe[11] - CLO equity investments totaled $1680 million with 92% in the U S and 8% in Europe[11] - The company purchased $906 million of CLO investments and sold $159 million[11] - The weighted average GAAP yield for the quarter based on amortized cost was 156% on the total CLO portfolio[11] Distributions - The company received $159 million in recurring cash distributions from the investment portfolio or $042 per share[11] - The distribution rate was 172% based on the August 18 2025 closing stock price of $559 and a monthly distribution of $008 per common share declared on August 7 2025[11]

Group 1: Annaly Capital Management (NLY) - NLY has four preferred shares, with NLY-F and NLY-I showing materially negative yield to call, while NLY-G has a positive yield to call of 8.73%, which is lower than most baby bonds in the sector [2] - A new preferred share, NLY-J, has been issued with a fixed-rate coupon of 8.875%. The share is callable after five years, limiting upside if rates fall, while increasing interest rate risk if rates rise [3] - NLY-J's trading price has increased from $24.80 to $25.10, indicating a common trend for preferred shares to rise in the initial weeks after issuance [4] Group 2: MFA Financial (MFA) - MFA has two preferred shares and two baby bonds, with MFA-C showing a reasonable floating spread of 5.79% over 3-month LIBOR, resulting in a stripped yield of approximately 10.3% to 10.4% at a price of $24.23 [5][6] - MFA-B is a fixed-rate share with an 8.84% stripped yield at $21.58, but the potential upside is limited, making it less attractive compared to baby bonds [8] - Overall, MFA-C is slightly favored over MFA-B, but baby bonds are preferred if their prices dip modestly, as this can significantly impact yield to call and yield to maturity [9] Group 3: ARMOUR Residential REIT (ARR) - ARR was the worst-performing mortgage REIT last week, with shares dropping 4.6%, significantly worse than peers [13][14] - The price-to-NAV for ARR has decreased to a projected 0.92x, indicating a decline in market sentiment following a public offering announcement [14][16] - The public offering was made at about 98% of book value, which did not excite shareholders, contributing to the decline in share price [16]

Core Viewpoint - Armour Residential REIT (ARR) experienced a quarter that was largely as expected, with a slight decline in book value and weaker-than-anticipated earnings, primarily due to market fluctuations early in the quarter, although some recovery in June mitigated the impact [1][23]. Book Value and Earnings Performance - ARR reported a minor decrease in book value (BV) of 1.1% during Q2 2025, which was in line with expectations, but it underperformed compared to stronger peers in the agency mREIT sector [11][23]. - The on-balance sheet investment portfolio valuation gain was $16.5 million, closely matching the projected $20.0 million, leading to a BV underperformance of $0.04 per common share [3][23]. - Core earnings/EAD for Q2 2025 were reported at $67.9 million, which was a modest underperformance compared to the estimated $74.0 million, resulting in a variance of $0.071 per share [11][19]. Interest Income and Operational Expenses - Net interest income decreased from $36.3 million in Q1 2025 to $33.1 million in Q2 2025, a decline of $3.2 million, which was below the projected $37.5 million [7][23]. - Operational expenses increased from $13.1 million in Q1 2025 to $14.3 million in Q2 2025, which also contributed to the core earnings underperformance [8][23]. Hedging and Derivative Performance - ARR increased its hedging coverage ratio from 84% to 93% during Q2 2025, which was slightly above the projected range of 85%-90% [4][16]. - The company experienced a derivative valuation loss of $157 million, which was more severe than the anticipated loss of $150 million, contributing to a BV underperformance of $0.09 per common share [4][23]. Sector Comparison and Future Outlook - ARR's performance was weaker compared to peers like AGNC, DX, and NLY, which reported better results in terms of BV and core earnings [23]. - The company is currently rated as a HOLD, with expectations for stabilization in core earnings/EAD in Q3 2025 before any potential rating downgrades [13][24].