Annaly Capital Management, Inc. (NLY)
Summary
Annaly Capital: The 13% Yield Is Covered, But The Premium To Book Value Matters
Annaly Capital Management offers a 13% dividend yield, currently covered by Q2 EAD of $0.79 versus a $0.75 dividend. NLY trades at 1.14x book value, limiting margin of safety despite improving fundamentals and diversified portfolio exposure. Strong hedging (97% ratio) and portfolio diversification support earnings, but modest dividend coverage and premium valuation temper upside.
Annaly Capital: Three Return Streams Support A Premium To Book
Annaly Capital Management is rated Buy at $22.94, with a base case fair value of $25.55, implying 11.4% price upside. NLY's diversified allocation across Agency MBS, Residential Credit, and MSR supports a blended target return of 14.58%, well above its 11.5% cost of equity. Agency segment growth, falling funding costs, and rising asset yields are driving returns toward management's 14%-16% target range.
Mortgage REITs Yield Up To 18%: Buy Rithm Capital And Annaly Capital, Avoid Dynex Capital And Armour Residential
Rithm Capital offers the best combination of strong dividend coverage (2.4x) and a substantial discount to book value (~0.82x). Annaly Capital earns a Buy rating for its consistent dividend coverage and improving fundamentals, despite trading above book value and thinner coverage. Dynex Capital and Armour Residential provide higher yields but lack sufficient earnings cushion, making their dividends less attractive relative to risk and valuation.
Annaly Capital Management, Inc. Investors
| Name | Quantity | Cost | Value | Profit ($) | Gain (%) |
|---|---|---|---|---|---|
| TJD Thomas John Drogan PR Inc.IPAL SECURITIES Inc. | 78,369 | $1.55M | $1.78M | $233,785.06 | 15.11% |
 Timothy M. Bidwell Hazlett, BURT & WATSON Inc. | 2,000 | $34,349.35 | $45,440 | $11,090.65 | 32.29% |
 Curtis Ellergodt Rothschild Investment LLC | 3,590 | $73,866.05 | $81,385.3 | $7,519.25 | 10.18% |
| BZ Brandon Zatopek Commonwealth Equity Services LLC | 426,970 | $9.55M | $9.84M | $290,345.24 | 3.04% |
| PN Peter Nicholson First Bancorp Inc. /ME/ | 4,475 | $100,061 | $102,522.25 | $2,461.25 | 2.46% |
Annaly Capital Management, Inc. Analysts
| Name | Quantity | Cost | Value | Profit ($) | Gain (%) |
|---|---|---|---|---|---|
| CL Crispin Love Piper Sandler | 538.07 | $12,138.79 | $12,483.15 | $344.36 | 2.84% |
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Annaly Capital Management, Inc. Profile
| Mortgage Real Estate Investment Trusts (REITs) Industry | Financials Sector | David L. Finkelstein CEO | NYSE Exchange | 035710839 CUSIP |
| US Country | 212 Employees | 30 Jun 2026 Last Dividend | 26 Sep 2022 Last Split | 8 Oct 1997 IPO Date |
Overview
Annaly Capital Management, Inc., established in 1996 and headquartered in New York, New York, positions itself as a diversified capital manager with a strong emphasis on mortgage finance. The company stands out in the financial sector by focusing on a broad spectrum of mortgage-related investments. As a company that has elected to be taxed as a real estate investment trust (REIT), Annaly Capital Management enjoys certain tax advantages; primarily, it is exempt from federal income tax on the condition that it distributes its taxable income to its shareholders. This tax structure allows the company to focus on delivering value to its investors through its diverse investment strategies in the mortgage finance landscape.
Products and Services
Annaly Capital Management offers a wide array of products and services centered around mortgage finance, including:
- Agency Mortgage-Backed Securities: These are securities collateralized by residential mortgages and backed by governmental agencies. Annaly invests in these securities as a fundamental part of its portfolio, offering investors exposure to the residential housing market.
- Non-Agency Residential Whole Loans and Securitized Products: The company also invests in residential whole loans and securitized products that are not backed by governmental agencies, thereby diversifying its investment approach within the residential and commercial markets.
- Mortgage Servicing Rights: Annaly invests in mortgage servicing rights, providing a strategic income stream derived from the servicing of mortgage loans. This area represents an integral component of the company’s broader investment strategy in the mortgage sector.
- Agency Commercial Mortgage-Backed Securities: Similar to its residential strategy, Annaly extends its portfolio to include commercial mortgage-backed securities, which are funded by mortgages on commercial properties and backed by agencies.
- To-Be-Announced (TBA) Forward Contracts: The company engages in TBA forward contracts, which are a type of derivative used in the mortgage-backed securities market, offering a hedge against interest rate movements.
- Residential Mortgage Loans: Direct investments in residential mortgage loans allow the company to further cement its presence in the housing finance sector, providing another layer of diversification and potential income.
- Agency or Private Label Credit Risk Transfer Securities: Annaly participates in both agency and private label credit risk transfer securities, mechanisms that allow the company to manage and diversify its risk exposure in the mortgage lending space.
