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Analyst’s Disclosure: I/we have a beneficial long position in the shares of NLY, AGNC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Annaly Capital Management, Inc. (NLY) has a preferred share we will be looking at today: Annaly Capital Management, Inc. 6.95% PFD SER F (NLY.PR.F). It offers a stripped yield around 9.31% and carries our lowest risk rating. It’s trading only eleven cents above our buy target.

Investors have the opportunity to invest in an excellent preferred share from one of the strongest mortgage REITs in the sector, and they’re being held back by an amount of money that wouldn’t even impress a vending machine.

That being said, there’s also the small matter of Annaly having the ability to redeem shares.

That complicates things.

NLY-F When we last covered NLY-F, we liked the preferred share, but it was a bit too expensive. Apparently, the market has decided to make us wait just a little longer.

NLY-F was recently trading around $25.38:

The REIT Forum

Our current price targets are:

Strong Buy Under: $24.29.

Buy Under: $25.27.

Overpriced: $25.87.

At $25.38, NLY-F trades at around 100.4% of our buy target. That's extremely close.

We've spent over a decade looking for attractive opportunities in preferred shares (we found many along the way). Now we're staring at one that is only $0.11 above our buy target. NLY-F carries a risk rating of 1 on our scale from 1 to 5. We consider Annaly's preferred shares among the least risky in the mortgage REIT sector. The company has substantial common equity relative to its preferred shares. That provides an extra layer of safety for preferred shareholders. While that doesn’t mean NLY preferred shares are risk-free, they are some of the least risky investments in the sector.

Floating Dividend NLY-F is a fixed-to-floating preferred share. It originally carried a fixed coupon of 6.95%, but the dividend began floating in 2022.

The REIT Forum

NLY-F currently offers a floating yield on price of around 9.30%. That’s a substantial amount of income for a preferred share carrying our lowest risk rating. The 4.993% spread is materially more than Annaly Capital Management, Inc. PFD SER G (NLY.PR.G), which has a spread of only 4.172%.

Investors need to remember that the dividend isn't fixed. If short-term interest rates decline, the dividend on NLY-F will decline as well. We don't consider that a reason to avoid floating-rate preferred shares. We simply want investors to understand what they're buying.

The Downside Let’s get into the biggest issue with NLY-F. The annualized yield to call is approximately negative 2.3%. That's not particularly attractive. In fact, we have done extensive research and determined that investors generally prefer positive returns. The issue here is that NLY-F can be redeemed at $25 per share, while the market price is around $25.38. If Annaly calls NLY-F, investors purchasing today would receive $25 per share plus accrued dividends. That would result in a slight capital loss, as the dividend accrual through the call date (if a call was announced this afternoon, effective in 30 days) wouldn’t quite offset the $.38 premium.

We calculate dividend accrual based on the ex-dividend date. That matches our theory that it is important for the dividend to go to your account. NLY will calculate dividend accrual based on the dividend payment date. Those two dates are often very close to 30 days apart. Consequently, if shares were called immediately, the dividend accrual for the final payout would be right around $.32. That’s the same as the amount we have recorded for dividend accrual today. For some mortgage REITs, the ex-dividend date and payment date are often about 15 to 18 days apart. However, for the rest, it is common for the dates to be 30 days apart. We make it easier to handle by tracking the “worst cash to call” in a spreadsheet we share with members. That allows members to see how much they would stand to lose if shares were called immediately, rather than only using the annualized rate. Sometimes having the exact value can be important because an annualized rate of -2.3% that is only sustained for one month isn’t nearly as bad as if that were the rate sustained for a year.

NLY-F has a relatively high floating spread. Annaly may decide at some point that it can replace NLY-F with less expensive financing. As an important note, Annaly recently redeemed NLY-I on October 1, 2026. NLY-I had a floating spread of 4.989%, which is very similar to NLY-F’s 4.993%. That doesn't mean Annaly will definitely call NLY-F next. However, it does give investors a good reason to take the possibility seriously.

Investors who will buy a preferred share at inflated prices and believe Annaly would never redeem its floating-rate preferred shares recently received a counterargument.

From Annaly.

In cash.

NLY-F Close To A Buy Despite the call risk, we believe NLY-F remains one of the more attractive preferred shares with a very low-risk rating. In fact, as of writing this article, we have no preferred shares in the buy range that are under a risk rating of 2.5 (though a few are extremely close). The dividend yield offered by NLY-F is excellent given its risk rating.

One of the reasons we keep such a close eye on Annaly’s preferred shares is the substantial common equity relative to the preferred share liquidation ($25 per share). This matters to investors because, in general, the common equity will absorb losses before the preferred shareholders do. The better the ratio, the more comfortable we can be with the preferred share (generally speaking).

How We Look At Preferred Shares A strong company doesn't automatically make its preferred shares a good investment. However, it usually helps a great deal while we assign a risk rating. We consider the price, yield, call risk, and relative alternatives in the preferred shares space.

That's precisely why we maintain different price targets for preferred shares.

We spend a great deal of time comparing preferred shares and baby bonds at The REIT Forum. We recently wrote a guide on swapping preferred shares. The basic concept is simple. When two similar preferred shares get too far apart on valuation, investors can sell the more expensive share and move into the cheaper one.

For readers who want to see how often we actually do this, we also published our most recent 100 trades in preferred shares and baby bonds. We find these opportunities fairly often in the preferred shares of mortgage REITs.

We are always hunting for a better price.

At $25.38, NLY-F is in our hold range.

Even a tiny decline in the price would change that.

Final Thoughts NLY-F is offering a stripped yield around 9.31% while carrying a risk rating of 1. That's a great combination.

However, investors need to look at the negative yield to call. Especially after Annaly’s recent redemption of NLY-I.

We like NLY-F. We just don’t like paying more than we believe it’s worth. We aren’t going to chase shares simply because we like the company and the risk rating. At $25.38, NLY-F is in our hold range. Our buy under target is $25.27.

We aren’t asking for too much. Just eleven cents. I might even consider budging by a few. We’re finally close.

Key Takeaways NLY reported EAD of 80 cents per share, beating estimates of 77 cents and rising from 73 cents a year ago.Net interest income climbed to $543.6 million, while the annualized EAD return on equity rose to 15.86%.EAD covered the 75-cent dividend 1.07X, but book value fell to $17.86 and GAAP leverage rose to 8.0X.
Annaly Capital Management, Inc.’s (NLY - Free Report)  third-quarter 2026 earnings available for distribution (EAD) per average common share of 80 cents beat the Zacks Consensus Estimate of 77 cents. The figure increased from 73 cents in the year-ago quarter.

NLY’s net interest income (NII) and net interest margin improved year over year in the reported quarter. The increase in EAD and stronger net interest income were encouraging. However, a decline in book value per common share (BVPS), higher funding costs and a GAAP net loss were concerning.

Net loss available to common stockholders was $1.04 billion compared with net income of $791.3 million in the year-ago period.

Inside Annaly’s Q3 HeadlinesNII was $543.6 million in the reported quarter, which missed the Zacks Consensus Estimate of $596 million. The figure increased significantly from the year-ago quarter.

Net interest spread (excluding the premium amortization adjustment, or PAA) was 1.42% in the third quarter, down from 1.50% in both the prior-year and prior quarters.

Annaly’s BVPS was $17.86 as of Sept. 30, 2026, down from $19.25 in the prior-year quarter. At the end of the reported quarter, the company’s economic capital ratio was 14.2%, down from 14.8% in the year-ago quarter.

The weighted average experienced constant prepayment rate was 9.6%, compared with 8.6% in the year-ago quarter.

Annaly generated an annualized EAD return on average equity of 15.86% in the third quarter, up from 14.70% in the prior-year quarter.

The company’s total portfolio was $106.5 billion in the quarter, including a $91.8 billion Agency portfolio. The Residential Credit portfolio was $10.4 billion, while the mortgage servicing rights (MSR) portfolio increased to $4.3 billion in market value.

NLY Reports Higher Leverage Amid Market VolatilityAnnaly’s leverage increased in the quarter, with GAAP leverage at 8.0X, up from 7.1X in the year-ago quarter. Economic leverage rose to 5.9X from 5.7X in the prior-year period. The company reported total stockholders’ equity of $15.8 billion as of quarter-end, down from $16.9 billion in the previous quarter.

Liquidity remained important amid volatility in fixed-income markets. Annaly ended the quarter with $8.5 billion in total assets available for financing, including $4.2 billion in cash and unencumbered Agency mortgage-backed securities (MBS). The company maintained $8.3 billion in warehouse capacity across its Residential Credit and MSR businesses, including $2.8 billion of committed capacity.

Annaly also issued 12 securitizations totaling a record $7.4 billion through its Residential Credit Group during the quarter.

Annaly Maintains a Defensive Hedging StrategyAgainst a challenging fixed-income market backdrop, NLY continued actively managing its hedge portfolio, primarily adding Treasury futures to offset market-driven extension and maintain a disciplined risk posture. The company ended the quarter with a hedge ratio of 100%, up from 92% in the year-ago quarter and 97% in the previous quarter.

Funding costs increased during the quarter. Average GAAP costs of interest-bearing liabilities rose six basis points sequentially to 4.34%, while average economic costs increased seven basis points to 4.03%. Net interest margin, excluding PAA, was 1.69%, compared with 1.70% in the third quarter of 2025 and 1.76% in the previous quarter.

The average yield on interest-earning assets, excluding PAA, was 5.45%, compared with 5.46% in both the year-ago and prior quarters. GAAP net interest margin improved to 1.54%, up marginally from the prior-year quarter.

NLY Supports Dividend Coverage Through Earnings and Capital RaisingA key highlight for income-focused investors was that earnings again exceeded the common dividend. Annaly declared a quarterly common stock cash dividend of 75 cents per share, unchanged from the previous quarter and up from 70 cents in the year-ago period. EAD of 80 cents per share provided 1.07X coverage of the declared dividend.

The company also continued raising equity capital to support its investment strategy. Annaly raised $757 million through its at-the-market sales program during the quarter, which it characterized as accretive. The capital-raising activity supports the company’s ability to pursue investment opportunities across its Agency, Residential Credit and MSR strategies.

Our Take on NLYAnnaly’s third-quarter results benefited from higher net interest income, improved GAAP net interest margin and stronger EAD per share. Earnings continued to cover the common dividend, while active hedging, liquidity management and equity issuance supported the company’s investment strategy. However, the decline in book value per share, higher funding costs and increased leverage remain key concerns. The substantial GAAP net loss also highlights the impact of market-driven investment valuation changes on reported results.G

Going forward, Annaly’s performance will likely remain sensitive to interest-rate movements, mortgage prepayment trends and financing costs. Its ability to maintain dividend coverage while preserving book value and managing leverage will be important for sustaining shareholder returns.

NLY currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of NLY’s PeersARMOUR Residential REIT’s (ARR - Free Report) third-quarter 2026 results reflected distributable earnings available to common stockholders of 71 cents per share, which missed the Zacks Consensus Estimate of 73 cents.

ARR’s net interest income increased to $83.7 million from $38.5 million in the prior-year quarter. However, the company reported a GAAP net loss of $2.26 per common share against net income of $1.49 per share in the year-ago quarter. Book value per common share declined to $14.55 from $17.49 in the year-ago period.

AGNC Investment Corp.’s (AGNC - Free Report) third-quarter 2026 results reflected net spread and dollar roll income of 37 cents per common share, which missed the Zacks Consensus Estimates of 39 cents.

The company reported a net loss of $1.17 per common share and a 16.9% sequential decline in tangible net book value per comon share to $7.13. Higher interest rates and weakness in the Agency mortgage-backed securities market pressured performance. However, AGNC maintained liquidity of $6.3 billion in unencumbered cash and Agency MBS and raised $992 million through its at-the-market common stock offering program.

On its third-quarter 2026 earnings call, held on Oct. 21, 2026, Annaly Capital (NLY -0.79%) reported earnings available for distribution, an adjusted measure of core operational profit, of $0.80 per share to cover its quarterly dividend. It was a rough quarter, as GAAP net loss was $1.36 per average common share, and economic return was negative 7.6% while book value per share fell 11.4% to $17.86. The report indicated that higher coupon income and disciplined hedging can maintain dividend durability, even in volatile rate environments.

Three key takeaways from management explain how the business is navigating these market conditions.

1. Onslow Bay Achieves Record Quarterly Residential Funding VolumeAnnaly Capital relies on its Onslow Bay correspondent channel, a platform that purchases residential mortgage loans directly from originators, to generate higher-yielding credit assets. Expanding the funding volume enables the business to create proprietary residential credit portfolios with tight underwriting standards.

Our Onslow Bay correspondent channel delivered another strong quarter, with $7 billion of lock volume and $5.8 billion of fundings, our highest quarterly funding volume since the channel's inception more than 5 years ago.
-- David Finkelstein, Chief Executive Officer and Co-Chief Investment Officer2. Bulk Servicing Acquisitions Solidify Capital PositionMortgage servicing rights, or contracts that grant the right to service loans for a fee, generate steady cash flows that cushion bond market swings. Scale in bulk purchases helps Annaly Capital earn higher float income from borrower escrow accounts when interest rates rise.

Year to date, we remain the largest purchaser of bulk MSR, reflecting the value we bring to the origination community as a strategic partner with a deep permanent capital base.
-- David Finkelstein, Chief Executive Officer and Co-Chief Investment Officer3. Specified Pools Shield Agency Portfolios From VolatilityAgency mortgage-backed securities, or government-backed residential mortgage bonds, form the majority of the portfolio. Investing in specified pools, which are targeted mortgage packages with lower loan balances or seasoned loans, protects asset value against unexpected loan prepayment or extension risks.

On average, our pools are more than three and a half years seasoned and carry loan balances less than half those of new production, providing both call and extension protection.
-- David Finkelstein, Chief Executive Officer and Co-Chief Investment OfficerLooking AheadInterest rate volatility is subsiding, allowing high yields to support returns.

We entered the fourth quarter prudently positioned with substantial liquidity, and we remain focused on preserving capital while dynamically allocating across our three businesses as opportunities emerge.
-- David Finkelstein, Chief Executive Officer and Co-Chief Investment OfficerDiversified platforms in servicing, residential credit, and agency bonds provide capital flexibility without fixed origination costs. Proprietary asset creation and relatively disciplined leverage underpin long-term value.

We believe the combination of diversified earnings, proprietary asset creation, conservative leverage, and capital allocation flexibility positions Annaly well to continue delivering attractive risk-adjusted returns.
-- David Finkelstein, Chief Executive Officer and Co-Chief Investment OfficerThe Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The Zacks Earnings ESP is a great way to find potential earnings surprises. Why investors should take advantage now.

NEW YORK--(BUSINESS WIRE)--Annaly Capital Management, Inc. (NYSE: NLY) ("Annaly" or the "Company") today announced its financial results for the quarter ended September 30, 2026.

Financial Highlights

GAAP net income (loss) of ($1.36) per average common share for the quarter Earnings available for distribution ("EAD") of $0.80 per average common share for the quarter Economic return (loss) of (7.6%) for the third quarter Book value per common share of $17.86 GAAP leverage of 8.0x, up from 7.4x in the prior quarter; economic leverage of 5.9x, up from 5.6x in the prior quarter Declared quarterly common stock cash dividend of $0.75 per share Business Highlights

Investment and Strategy

Total portfolio of $106.5 billion, including $91.8 billion in highly liquid Agency portfolio(1) Annaly’s Agency portfolio decreased modestly, representing 55% of dedicated capital(2), with activity focused on further rotation into higher coupon specified pools Actively managed the hedge portfolio throughout the quarter, primarily adding Treasury futures to offset market-driven extension and maintain a disciplined risk posture, ending the quarter with a hedge ratio of 100% Annaly’s Residential Credit portfolio was effectively unchanged at $10.4 billion(1), representing 23% of dedicated capital(2), with continued strong production from its whole loan correspondent channel including record loan fundings of $5.8 billion Annaly's MSR portfolio increased to $4.3 billion(1) in market value, representing 22% of dedicated capital(2); Onslow Bay is the sixth-largest non-bank servicer of Agency MBS(3) Financing and Capital

$8.5 billion of total assets available for financing(4), including cash and unencumbered Agency MBS of $4.2 billion During the quarter, Annaly Residential Credit Group issued twelve securitizations totaling a record $7.4 billion across a wide array of product types
– Remained the largest non-bank issuer and the second largest issuer overall of Prime Jumbo and Expanded Credit MBS(5) Average GAAP cost of interest-bearing liabilities of 4.34%, up six basis points quarter-over-quarter, and average economic cost of interest-bearing liabilities of 4.03%, up seven basis points quarter-over-quarter Maintained warehouse capacity of $8.3 billion across our Residential Credit and MSR businesses, including $2.8 billion of committed capacity Announced redemption of all outstanding shares of the $442.5 million Series I Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock(6) Raised $757 million of accretive capital through the Company’s at-the-market sales program(7) "While the third quarter of 2026 was a challenging period for fixed income markets, which we were not immune to, we entered the quarter prepared for the volatility. Our cycle-low leverage and minimal duration exposure provided us with the flexibility to actively manage our portfolio while continuing to make attractive investments across our three strategies," remarked Chief Executive Officer & Co-Chief Investment Officer David Finkelstein. "Meanwhile, Annaly generated EAD of $0.80 per share, once again exceeding the common stock dividend and underscoring the durable earnings power of our platform.

"Looking ahead, we remain disciplined in our approach to capital allocation, leverage, liquidity and our hedge portfolio. We continue to see ample investment opportunities across each of our three strategies and we believe Annaly’s deep capital base, differentiated operating capabilities and active portfolio management position us well to deploy capital and generate compelling risk-adjusted returns."

(1)

Total portfolio represents Annaly’s investments that are on-balance sheet and off-balance sheet in which Annaly has economic exposure. Assets exclude assets transferred or pledged to securitization vehicles of $42.5 billion, include TBA purchase contracts (market value) of $6.5 billion, include $4.1 billion of retained securities that are eliminated in consolidation and are shown net of participations issued totaling $2.2 billion.

(2)

Dedicated capital for each of the investment strategies is calculated as the difference between each investment strategy’s allocated assets (including TBAs) and liabilities.

(3)

Based on information aggregated from Fannie Mae and Freddie Mac monthly loan level files by eMBS servicing transfer data as of September 30, 2026. Excludes transfer activity related to platform acquisitions.

(4)

Comprised of $6.9 billion of unencumbered assets, which represents Annaly’s excess liquidity and defined as assets that have not been pledged or securitized (generally including cash and cash equivalents, Agency MBS, CRT, Non-Agency MBS, residential mortgage loans, MSR, reverse repurchase agreements, other unencumbered financial assets and capital stock), and $1.6 billion of fair value of collateral pledged for future advances.

(5)

Issuer ranking data from Inside Nonconforming Markets for 2025 to 2026 (October 9, 2026 issue). Used with permission.

(6)

All outstanding shares of Annaly's 6.750% Series I Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock were redeemed subsequent to quarter end on October 1, 2026.

(7)

Net of sales agent commissions and other offering expenses.

Financial Performance

The following table summarizes certain key performance indicators as of and for the quarters ended September 30, 2026, June 30, 2026 and September 30, 2025:

September 30,

2026

June 30,

2026

September 30,

2025

Book value per common share

$

17.86

$

20.15

$

19.25

GAAP net income per average common share (1)

$

(1.36

)

$

1.06

$

1.21

Annualized GAAP return on average equity (2)

(24.35

%)

19.88

%

23.69

%

GAAP leverage at period-end (3)

8.0:1

7.4:1

7.1:1

Net interest margin (4)

1.54

%

1.47

%

0.97

%

Average yield on interest earning assets (5)

5.58

%

5.44

%

5.40

%

Average GAAP cost of interest bearing liabilities (6)

4.34

%

4.28

%

4.73

%

Net interest spread

1.24

%

1.16

%

0.67

%

Non-GAAP metrics *

Earnings available for distribution per average common share (1)

$

0.80

$

0.79

$

0.73

Annualized EAD return on average equity

15.86

%

15.12

%

14.70

%

Economic leverage at period-end (3)

5.9:1

5.6:1

5.7:1

Net interest margin (excluding PAA) (4)

1.69

%

1.76

%

1.70

%

Average yield on interest earning assets (excluding PAA) (5)

5.45

%

5.46

%

5.46

%

Average economic cost of interest bearing liabilities (6)

4.03

%

3.96

%

3.96

%

Net interest spread (excluding PAA)

1.42

%

1.50

%

1.50

%

* Represents a non-GAAP financial measure. Please refer to the "Non-GAAP Financial Measures" section for additional information.

(1) Net of dividends on preferred stock. The quarter ended September 30, 2025 includes cumulative and undeclared dividends of $3.7 million on the Company's 8.875% Series J Fixed-Rate Cumulative Redeemable Preferred Stock (the "Series J Preferred Stock") as of September 30, 2025.

(2) Annualized GAAP return on average equity annualizes realized and unrealized gains and (losses) which may not be indicative of full year performance, unannualized GAAP return on average equity is (6.09%), 4.97%, and 5.92% for the quarters ended September 30, 2026, June 30, 2026, and September 30, 2025, respectively.

(3) GAAP leverage is computed as the sum of repurchase agreements, other secured financing, debt issued by securitization vehicles, participations issued, and U.S. Treasury securities sold, not yet purchased divided by total equity. Economic leverage is computed as the sum of recourse debt, cost basis of to-be-announced ("TBA") derivatives outstanding, and net forward purchases (sales) of investments divided by total equity. Recourse debt consists of repurchase agreements, other secured financing, structured repurchase transactions (included within Debt issued by securitization vehicles) and U.S. Treasury securities sold, not yet purchased. Debt issued by securitization vehicles (excluding structured repurchase transactions) and participations issued are non-recourse to us and are excluded from economic leverage.

(4) Net interest margin represents interest income less interest expense divided by average Interest Earning Assets. Net interest margin does not include net interest component of interest rate swaps. Net interest margin (excluding PAA) represents the sum of interest income (excluding PAA) plus TBA dollar roll income and less economic interest expense divided by the sum of average Interest Earning Assets plus average outstanding TBA contract balances. PAA represents the cumulative impact on prior periods, but not the current period, of quarter-over-quarter changes in estimated long-term prepayment speeds related to the Company’s Agency mortgage-backed securities.

(5) Average yield on interest earning assets represents annualized interest income divided by average interest earning assets. Average interest earning assets reflects the average amortized cost of our investments during the period. Average yield on interest earning assets (excluding PAA) is calculated using annualized interest income (excluding PAA).

(6) Average GAAP cost of interest bearing liabilities represents annualized interest expense divided by average interest bearing liabilities. Average interest bearing liabilities reflects the average balances during the period. Average economic cost of interest bearing liabilities represents annualized economic interest expense divided by average interest bearing liabilities. Economic interest expense is comprised of GAAP interest expense, the net interest component of interest rate swaps, and net interest on initial margin related to interest rate swaps, which is reported in Other, net in the Company’s Consolidated Statements of Comprehensive Income (Loss). Net interest on variation margin related to interest rate swaps is included in the Net interest component of interest rate swaps in the Company’s Consolidated Statements of Comprehensive Income (Loss).

Other Information

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements are based on management’s beliefs and expectations, speak only as of the date on which they were made, and are subject to significant risks and uncertainties. Actual results could differ materially from those set forth in forward-looking statements. Factors that could cause actual results to differ from those contained in the forward-looking statements can be found in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. Annaly undertakes no obligation to update or revise any forward-looking statements.

We use our website and LinkedIn account as additional channels for distributing material company information, along with our press releases, SEC filings and public conference calls and webcasts.

The Company prepares an investor presentation and financial supplement for the benefit of its shareholders. Please refer to the investor presentation for definitions of both GAAP and non-GAAP measures used in this news release. Both the Third Quarter 2026 Investor Presentation and the Third Quarter 2026 Financial Supplement can be found on our website.

Conference Call

The Company will hold the third quarter 2026 earnings conference call on October 21, 2026 at 9:00 a.m. Eastern Time. Participants are encouraged to pre-register for the conference call to receive a unique PIN to gain immediate access to the call and bypass the live operator. Pre-registration may be completed by accessing the pre-registration link found on the "Investors" section of the Company's website at www.annaly.com, or by using the following link: https://registrations.events/direct/IDX71212VIP2npOaYFOwrG0Td. Pre-registration may be completed at any time, including up to and after the call start time.

For participants who would like to join the call but have not pre-registered, access is available by dialing 800-715-9871 within the U.S., or 646-307-1963 internationally, and requesting the "Annaly Earnings Call."

There will also be an audio webcast of the call on www.annaly.com. A replay of the call will be available for one week following the conference call. The replay number is 800-770-2030 for domestic calls and 609-800-9909 for international calls and the conference passcode is 71212#. If you would like to be added to the e-mail distribution list, please visit www.annaly.com, click on News & Insights, then select Subscribe and complete the email notification form.

Financial Statements

ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(dollars in thousands, except per share data)

  September 30,

2026

June 30,

2026

March 31,

2026

December 31,

2025 (1)

September 30,

2025

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Assets

Cash and cash equivalents

$

2,180,894

$

2,912,086

$

1,912,444

$

2,037,838

$

2,096,696

Securities

86,897,746

89,515,485

88,473,681

91,287,630

85,062,725

Loans, net

6,869,820

7,280,979

7,230,876

5,020,784

4,008,299

Mortgage servicing rights

4,199,823

4,089,485

4,115,999

3,645,865

3,476,181

Interests in MSR

110,350

106,775

27,212

28,626

35,833

Assets transferred or pledged to securitization vehicles

42,459,566

38,256,690

34,207,738

32,067,433

29,512,309

Derivative assets

1,204,812

81,784

395,099

115,533

47,899

Reverse repurchase agreements

32,425

33,047

33,524

34,389

35,004

Receivable for unsettled trades

705,160

104,722

891,293

1,031

185,916

Principal and interest receivable

882,299

846,548

806,484

926,660

959,435

Intangible assets, net

4,708

5,380

6,053

6,726

7,398

Other assets

599,871

508,195

437,188

437,323

433,877

Total assets

$

146,147,474

$

143,741,176

$

138,537,591

$

135,609,838

$

125,861,572

Liabilities and stockholders’ equity

Liabilities

Repurchase agreements

$

85,525,065

$

86,895,874

$

85,068,102

$

81,865,723

$

75,118,963

Other secured financing

1,125,000

1,125,000

1,125,000

1,075,000

1,025,000

Debt issued by securitization vehicles

38,380,269

34,366,098

30,719,417

28,918,753

26,601,790

Participations issued

2,200,562

2,553,709

2,484,018

1,932,655

1,831,657

U.S. Treasury securities sold, not yet purchased

—

—

—

2,396,724

2,442,570

Derivative liabilities

302,774

247,968

207,369

53,755

199,100

Payable for unsettled trades

1,108,206

331,586

1,522,750

2,059,386

2,604,278

Interest payable

319,589

420,764

347,607

380,688

285,080

Dividends payable

588,505

562,931

511,203

494,881

476,737

Other liabilities

703,118

258,870

226,314

272,362

279,818

Total liabilities

130,253,088

126,762,800

122,211,780

119,449,927

110,864,993

Stockholders’ equity

Preferred stock, par value $0.01 per share (2)

1,802,480

1,802,480

1,802,480

1,802,480

1,802,480

Common stock, par value $0.01 per share (3)

7,847

7,506

7,303

7,070

6,811

Additional paid-in capital

29,654,134

28,886,263

28,427,555

27,927,113

27,352,976

Accumulated other comprehensive income (loss)

(795,806

)

(557,014

)

(533,614

)

(488,566

)

(624,387

)

Accumulated deficit

(14,848,732

)

(13,213,859

)

(13,429,615

)

(13,157,325

)

(13,626,983

)

Total stockholders’ equity

15,819,923

16,925,376

16,274,109

16,090,772

14,910,897

Noncontrolling interests

74,463

53,000

51,702

69,139

85,682

Total equity

15,894,386

16,978,376

16,325,811

16,159,911

14,996,579

Total liabilities and equity

$

146,147,474

$

143,741,176

$

138,537,591

$

135,609,838

$

125,861,572

(1) Derived from the audited consolidated financial statements at December 31, 2025.

(2) 6.95% Series F Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock - Includes 28,800,000 shares authorized, issued and outstanding. 6.50% Series G Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock - Includes 17,000,000 shares authorized, issued and outstanding. 6.75% Series I Preferred Stock - Includes 17,700,000 shares authorized, issued and outstanding. 8.875% Series J Fixed-Rate Cumulative Redeemable Preferred Stock - Includes 11,500,000 shares authorized, and 11,000,000 issued and outstanding.

(3) Includes 1,456,750,000 shares authorized. Includes 784,673,349 shares issued and outstanding at September 30, 2026; 750,574,308 shares issued and outstanding at June 30, 2026; 730,290,500 shares issued and outstanding at March 31, 2026; 706,972,452 shares issued and outstanding at December 31, 2025; 681,052,317 shares issued and outstanding at September 30, 2025.

ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(dollars in thousands, except per share data)

(Unaudited)

For the quarters ended

September 30,

2026

June 30,

2026

March 31,

2026

December 31,

2025

September 30,

2025

Net interest income

Interest income

$

1,970,425

$

1,812,198

$

1,724,930

$

1,690,707

$

1,532,497

Interest expense

1,426,813

1,324,005

1,272,239

1,324,128

1,256,747

Net interest income

543,612

488,193

452,691

366,579

275,750

Net servicing income

Servicing and related income

173,096

175,059

159,133

156,131

141,356

Servicing and related expense

17,087

17,835

16,580

16,485

15,104

Net servicing income

156,009

157,224

142,553

139,646

126,252

Other income (loss)

Net gains (losses) on investments and other

(4,721,745

)

(318,503

)

(672,119

)

289,428

561,927

Net gains (losses) on derivatives

3,074,072

552,426

409,112

251,799

(92,308

)

Other, net

16,895

13,521

9,323

13,952

13,959

Total other income (loss)

(1,630,778

)

247,444

(253,684

)

555,179

483,578

General and administrative expenses

Compensation expense

41,185

44,640

41,384

39,279

38,393

Other general and administrative expenses

12,021

13,549

11,180

11,928

11,947

Total general and administrative expenses

53,206

58,189

52,564

51,207

50,340

Income (loss) before income taxes

(984,363

)

834,672

288,996

1,010,197

835,240

Income taxes

16,335

6,899

(1,519

)

(7,754

)

(7,823

)

Net income (loss)

(1,000,698

)

827,773

290,515

1,017,951

843,063

Net income (loss) attributable to noncontrolling interests

1,061

5,100

7,863

4,457

10,618

Net income (loss) attributable to Annaly

(1,001,759

)

822,673

282,652

1,013,494

832,445

Dividends on preferred stock (1)

41,305

41,036

40,652

42,387

41,127

Net income (loss) available (related) to common stockholders

$

(1,043,064

)

$

781,637

$

242,000

$

971,107

$

791,318

Net income (loss) per share available (related) to common stockholders

Basic

$

(1.36

)

$

1.06

$

0.33

$

1.40

$

1.21

Diluted

$

(1.36

)

$

1.06

$

0.33

$

1.40

$

1.20

Weighted average number of common shares outstanding

Basic

764,359,434

738,926,270

722,707,153

693,011,031

656,335,974

Diluted

764,359,434

740,256,247

724,364,897

695,034,348

657,856,427

Other comprehensive income (loss)

Net income (loss)

$

(1,000,698

)

$

827,773

$

290,515

$

1,017,951

$

843,063

Unrealized gains (losses) on available-for-sale securities

(250,449

)

(23,400

)

(45,048

)

74,992

113,281

Reclassification adjustment for net (gains) losses included in net income (loss)

11,657

—

—

60,829

2,378

Other comprehensive income (loss)

(238,792

)

(23,400

)

(45,048

)

135,821

115,659

Comprehensive income (loss)

(1,239,490

)

804,373

245,467

1,153,772

958,722

Comprehensive income (loss) attributable to noncontrolling interests

1,061

5,100

7,863

4,457

10,618

Comprehensive income (loss) attributable to Annaly

(1,240,551

)

799,273

237,604

1,149,315

948,104

Dividends on preferred stock (1)

41,305

41,036

40,652

42,387

41,127

Comprehensive income (loss) attributable to common stockholders

$

(1,281,856

)

$

758,237

$

196,952

$

1,106,928

$

906,977

(1) The quarter ended December 31, 2025 excludes, and the quarter ended September 30, 2025 includes, cumulative and undeclared dividends of $3.7 million on the Company's Series J Preferred Stock as of September 30, 2025.

ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(dollars in thousands, except per share data)

For the nine months ended

September 30,

2026

September 30,

2025

(unaudited)

(unaudited)

Net interest income

Interest income

$

5,507,553

$

4,268,498

Interest expense

4,023,057

3,499,577

Net interest income

1,484,496

768,921

Net servicing income

Servicing and related income

507,288

423,461

Servicing and related expense

51,502

43,788

Net servicing income

455,786

379,673

Other income (loss)

Net gains (losses) on investments and other

(5,712,367

)

1,456,242

Net gains (losses) on derivatives

4,035,610

(1,458,960

)

Other, net

39,739

37,169

Total other income (loss)

(1,637,018

)

34,451

General and administrative expenses

Compensation expense

127,209

112,273

Other general and administrative expenses

36,750

36,149

Total general and administrative expenses

163,959

148,422

Income (loss) before income taxes

139,305

1,034,623

Income taxes

21,715

884

Net income (loss)

117,590

1,033,739

Net income (loss) attributable to noncontrolling interests

14,024

19,971

Net income (loss) attributable to Annaly

103,566

1,013,768

Dividends on preferred stock (1)

122,993

115,544

Net income (loss) available (related) to common stockholders

$

(19,427

)

$

898,224

Net income (loss) per share available (related) to common stockholders

Basic

$

(0.03

)

$

1.45

Diluted

$

(0.03

)

$

1.44

Weighted average number of common shares outstanding

Basic

742,107,269

621,484,893

Diluted

742,107,269

622,768,481

Other comprehensive income (loss)

Net income (loss)

$

117,590

$

1,033,739

Unrealized gains (losses) on available-for-sale securities

(318,897

)

311,717

Reclassification adjustment for net (gains) losses included in net income (loss)

11,657

81,578

Other comprehensive income (loss)

(307,240

)

393,295

Comprehensive income (loss)

(189,650

)

1,427,034

Comprehensive income (loss) attributable to noncontrolling interests

14,024

19,971

Comprehensive income (loss) attributable to Annaly

(203,674

)

1,407,063

Dividends on preferred stock (1)

122,993

115,544

Comprehensive income (loss) attributable to common stockholders

$

(326,667

)

$

1,291,519

(1) The nine months ended September 30, 2025 includes cumulative and undeclared dividends of $3.7 million on the Company's Series J Preferred Stock as of September 30, 2025.

Key Financial Data

The following table presents key metrics of the Company’s portfolio, liabilities and hedging positions, and performance as of and for the quarters ended September 30, 2026, June 30, 2026 and September 30, 2025:

September 30,

2026

June 30,

2026

September 30,

2025

Portfolio related metrics

Fixed-rate Residential Securities as a percentage of total Residential Securities

99

%

99

%

99

%

Adjustable-rate and floating-rate Residential Securities as a percentage of total Residential Securities

1

%

1

%

1

%

Weighted average experienced CPR for the period

9.6

%

11.6

%

8.6

%

Weighted average projected long-term CPR at period-end

8.6

%

11.0

%

10.4

%

Liabilities and hedging metrics

Weighted average days to maturity on repurchase agreements outstanding at period-end

30

33

49

Hedge ratio (1)

100

%

97

%

92

%

Weighted average pay rate on interest rate swaps at period-end (2)

3.19

%

3.20

%

3.16

%

Weighted average receive rate on interest rate swaps at period-end (2)

3.97

%

3.73

%

4.27

%

Weighted average net rate on interest rate swaps at period-end (2)

(0.78

%)

(0.53

%)

(1.11

%)

GAAP leverage at period-end (3)

8.0:1

7.4:1

7.1:1

GAAP capital ratio at period-end (4)

10.9

%

11.8

%

11.9

%

Performance related metrics

Book value per common share

$

17.86

$

20.15

$

19.25

GAAP net income per average common share (5)

$

(1.36

)

$

1.06

$

1.21

Annualized GAAP return on average equity (6)

(24.35

%)

19.88

%

23.69

%

Net interest margin (7)

1.54

%

1.47

%

0.97

%

Average yield on interest earning assets (8)

5.58

%

5.44

%

5.40

%

Average GAAP cost of interest bearing liabilities (9)

4.34

%

4.28

%

4.73

%

Net interest spread

1.24

%

1.16

%

0.67

%

Dividend declared per common share

$

0.75

$

0.75

$

0.70

Annualized dividend yield (10)

15.88

%

13.42

%

13.85

%

Non-GAAP metrics *

Earnings available for distribution per average common share (5)

$

0.80

$

0.79

$

0.73

Annualized EAD return on average equity (excluding PAA)

15.86

%

15.12

%

14.70

%

Economic leverage at period-end (3)

5.9:1

5.6:1

5.7:1

Economic capital ratio at period end (4)

14.2

%

14.9

%

14.8

%

Net interest margin (excluding PAA) (7)

1.69

%

1.76

%

1.70

%

Average yield on interest earning assets (excluding PAA) (8)

5.45

%

5.46

%

5.46

%

Average economic cost of interest bearing liabilities (9)

4.03

%

3.96

%

3.96

%

Net interest spread (excluding PAA)

1.42

%

1.50

%

1.50

%

* Represents a non-GAAP financial measure. Please refer to the "Non-GAAP Financial Measures" section for additional information.

(1) Measures total notional balances of interest rate swaps, interest rate swaptions (excluding long receiver swaptions), futures and U.S. Treasury securities sold, not yet purchased, relative to repurchase agreements, other secured financing, cost basis of TBA derivatives outstanding and net forward purchases (sales) of investments; excludes MSR and the effects of term financing, both of which serve to reduce interest rate risk. Additionally, the hedge ratio does not take into consideration differences in duration between assets and liabilities.

(2) Excludes forward starting swaps.

(3) GAAP leverage is computed as the sum of repurchase agreements, other secured financing, debt issued by securitization vehicles, participations issued, and U.S. Treasury securities sold, not yet purchased divided by total equity. Economic leverage is computed as the sum of recourse debt, cost basis of to-be-announced ("TBA") derivatives outstanding, and net forward purchases (sales) of investments divided by total equity. Recourse debt consists of repurchase agreements, other secured financing, structured repurchase transactions (included within Debt issued by securitization vehicles) and U.S. Treasury securities sold, not yet purchased. Debt issued by securitization vehicles (excluding structured repurchase transactions) and participations issued are non-recourse to us and are excluded from economic leverage.

(4) GAAP capital ratio is computed as total equity divided by total assets. Economic capital ratio is computed as total equity divided by total economic assets. Total economic assets include the implied market value of TBA derivatives and are net of debt issued by securitization vehicles (excluding structured repurchase transactions) and participations issued.

(5) Net of dividends on preferred stock. The quarter ended September 30, 2025 includes cumulative and undeclared dividends of $3.7 million on the Company's Series J Preferred Stock as of September 30, 2025.

(6) Annualized GAAP return on average equity annualizes realized and unrealized gains and (losses) which may not be indicative of full year performance, unannualized GAAP return on average equity is (6.09%), 4.97% and 5.92% for the quarters ended September 30, 2026, June 30, 2026, and September 30, 2025, respectively.

(7) Net interest margin represents interest income less interest expense divided by average interest earning assets. Net interest margin does not include net interest component of interest rate swaps. Net interest margin (excluding PAA) represents the sum of interest income (excluding PAA) plus TBA dollar roll income less economic interest expense divided by the sum of average interest earning assets plus average TBA contract balances.

(8) Average yield on interest earning assets represents annualized interest income divided by average interest earning assets. Average interest earning assets reflects the average amortized cost of our investments during the period. Average yield on interest earning assets (excluding PAA) is calculated using annualized interest income (excluding PAA).

(9) Average GAAP cost of interest bearing liabilities represents annualized interest expense divided by average interest bearing liabilities. Average interest bearing liabilities reflects the average balances during the period. Average economic cost of interest bearing liabilities represents annualized economic interest expense divided by average interest bearing liabilities. Economic interest expense is comprised of GAAP interest expense, the net interest component of interest rate swaps, and net interest on initial margin related to interest rate swaps, which is reported in Other, net in the Company’s Consolidated Statements of Comprehensive Income (Loss). Net interest on variation margin related to interest rate swaps is included in the Net interest component of interest rate swaps in the Company’s Consolidated Statements of Comprehensive Income (Loss).

(10) Based on the closing price of the Company’s common stock of $18.89, $22.36 and $20.21 at September 30, 2026, June 30, 2026 and September 30, 2025, respectively.

The following table contains additional information on our investment portfolio as of the dates presented:

For the quarters ended

September 30,

2026

June 30,

2026

September 30,

2025

Agency mortgage-backed securities

$

85,294,151

$

87,768,578

$

83,317,819

Residential credit risk transfer securities

69

46,872

330,647

Non-agency mortgage-backed securities

1,603,526

1,565,016

1,414,259

Commercial mortgage-backed securities

—

135,019

—

Total securities

$

86,897,746

$

89,515,485

$

85,062,725

Residential mortgage loans

$

6,869,820

$

7,280,979

$

4,008,299

Total loans, net

$

6,869,820

$

7,280,979

$

4,008,299

Mortgage servicing rights

$

4,199,823

$

4,089,485

$

3,476,181

Interests in MSR

$

110,350

$

106,775

$

35,833

Residential mortgage loans transferred or pledged to securitization vehicles

$

42,459,566

$

38,256,690

$

29,512,309

Assets transferred or pledged to securitization vehicles

$

42,459,566

$

38,256,690

$

29,512,309

Total investment portfolio

$

140,537,305

$

139,249,414

$

122,095,347

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company provides the following non-GAAP measures:

earnings available for distribution ("EAD"); earnings available for distribution attributable to common stockholders; earnings available for distribution per average common share; annualized EAD return on average equity; economic leverage; economic capital ratio; interest income (excluding PAA); economic interest expense; economic net interest income (excluding PAA); average yield on interest earning assets (excluding PAA); average economic cost of interest bearing liabilities; net interest margin (excluding PAA); and net interest spread (excluding PAA). These measures should not be considered a substitute for, or superior to, financial measures computed in accordance with GAAP. While intended to offer a fuller understanding of the Company’s results and operations, non-GAAP financial measures also have limitations. For example, the Company may calculate its non-GAAP metrics, such as earnings available for distribution, or the PAA, differently than its peers making comparative analysis difficult. Additionally, in the case of non-GAAP measures that exclude the PAA, the amount of amortization expense excluding the PAA is not necessarily representative of the amount of future periodic amortization nor is it indicative of the term over which the Company will amortize the remaining unamortized premium. Changes to actual and estimated prepayments will impact the timing and amount of premium amortization and, as such, both GAAP and non-GAAP results.

These non-GAAP measures provide additional detail to enhance investor understanding of the Company’s period-over-period operating performance and business trends, as well as for assessing the Company’s performance versus that of industry peers. Additional information pertaining to the Company’s use of these non-GAAP financial measures, including discussion of how each such measure may be useful to investors, and reconciliations to their most directly comparable GAAP results are provided below.

Earnings available for distribution, earnings available for distribution attributable to common stockholders, earnings available for distribution per average common share and annualized EAD return on average equity

The Company's principal business objective is to generate net income for distribution to its stockholders and to preserve capital through prudent selection of investments and continuous management of its portfolio. The Company generates net income by earning a net interest spread on its investment portfolio, which is a function of interest income from its investment portfolio less financing, hedging and operating costs. Earnings available for distribution, which is defined as the sum of (a) economic net interest income, (b) TBA dollar roll income, (c) net servicing income less realized amortization of MSR, (d) other income (loss) (excluding amortization of intangibles, non-EAD income allocated to equity method investments and other non-EAD components of other income (loss)), (e) general and administrative expenses (excluding transaction expenses and non-recurring items), and (f) income taxes (excluding the income tax effect of non-EAD income (loss) items) and excludes (g) the premium amortization adjustment ("PAA") representing the cumulative impact on prior periods, but not the current period, of quarter-over-quarter changes in estimated long-term prepayment speeds related to the Company’s Agency mortgage-backed securities is used by the Company's management and, the Company believes, used by analysts and investors to measure its progress in achieving its principal business objective.

The Company seeks to fulfill this objective through a variety of factors including portfolio construction, the degree of market risk exposure and related hedge profile, and the use and forms of leverage, all while operating within the parameters of the Company's capital allocation policy and risk governance framework.

The Company believes these non-GAAP measures provide management and investors with additional details regarding the Company’s underlying operating results and investment portfolio trends by (i) making adjustments to account for the disparate reporting of changes in fair value where certain instruments are reflected in GAAP net income (loss) while others are reflected in other comprehensive income (loss) and (ii) by excluding certain unrealized, non-cash or episodic components of GAAP net income (loss) in order to provide additional transparency into the operating performance of the Company’s portfolio. In addition, EAD serves as a useful indicator for investors in evaluating the Company's performance and ability to pay dividends. Annualized EAD return on average equity, which is calculated by dividing earnings available for distribution over average stockholders’ equity, provides investors with additional detail on the earnings available for distribution generated by the Company’s invested equity capital.

The following table presents a reconciliation of GAAP financial results to non-GAAP earnings available for distribution for the periods presented:

For the quarters ended

September 30,

2026

June 30,

2026

September 30,

2025

(dollars in thousands, except per share data)

GAAP net income (loss)

$

(1,000,698

)

$

827,773

$

843,063

Adjustments to exclude reported realized and unrealized (gains) losses

Net (gains) losses on investments and other (1)

4,728,272

316,206

(560,957

)

Net (gains) losses on derivatives (2)

(2,982,293

)

(464,968

)

284,199

Other adjustments

Amortization of intangibles

672

673

673

Non-EAD (income) loss allocated to equity method investments (3)

—

—

376

Transaction expenses and non-recurring items (4)

10,738

10,246

8,117

Income tax effect of non-EAD income (loss) items

13,820

5,044

(6,742

)

TBA dollar roll income (5)

18,803

17,904

9,019

MSR amortization (6)

(93,570

)

(89,816

)

(72,081

)

EAD attributable to noncontrolling interests

(2,086

)

(2,476

)

(4,175

)

Premium amortization adjustment cost (benefit)

(44,518

)

7,081

18,390

Earnings available for distribution *

649,140

627,667

519,882

Dividends on preferred stock (7)

41,305

41,036

41,127

Earnings available for distribution attributable to common stockholders *

$

607,835

$

586,631

$

478,755

GAAP net income (loss) per average common share

$

(1.36

)

$

1.06

$

1.21

Earnings available for distribution per average common share *

$

0.80

$

0.79

$

0.73

Annualized GAAP return (loss) on average equity (8)

(24.35

%)

19.88

%

23.69

%

Annualized EAD return on average equity *

15.86

%

15.12

%

14.70

%

* Represents a non-GAAP financial measure.

(1) Includes write-downs or recoveries on investments which are reported in Other, net in the Company's Consolidated Statements of Comprehensive Income (Loss).

(2) The adjustment to add back Net (gains) losses on derivatives does not include the net interest component of interest rate swaps which is reflected in earnings available for distribution. The net interest component of interest rate swaps totaled $91.8 million, $87.5 million and $191.9 million for the quarters ended September 30, 2026, June 30, 2026 and September 30, 2025, respectively.

(3) The Company excludes non-EAD (income) loss allocated to equity method investments, which represents the unrealized (gains) losses allocated to equity interests in a portfolio of MSR, which is a component of Other, net.

(4) Represents costs incurred in connection with securitizations of residential whole loans.

(5) TBA dollar roll income represents a component of Net gains (losses) on derivatives.

(6) MSR amortization utilizes purchase date cash flow assumptions and actual unpaid principal balances and is calculated as the difference between projected MSR yield income and net servicing income for the period.

(7) The quarter ended September 30, 2025 includes cumulative and undeclared dividends of $3.7 million on the Company's Series J Preferred Stock as of September 30, 2025.

(8) Annualized GAAP return (loss) on average equity annualizes realized and unrealized gains and (losses) which may not be indicative of full year performance, unannualized GAAP return (loss) on average equity is (6.09%), 4.97%, and 5.92% for the quarters ended September 30, 2026, June 30, 2026, and September 30, 2025, respectively.

From time to time, the Company enters into TBA forward contracts as an alternate means of investing in and financing Agency mortgage-backed securities. A TBA contract is an agreement to purchase or sell, for future delivery, an Agency mortgage-backed security with a specified issuer, term and coupon. A TBA dollar roll represents a transaction where TBA contracts with the same terms but different settlement dates are simultaneously bought and sold. The TBA contract settling in the later month typically prices at a discount to the earlier month contract with the difference in price commonly referred to as the "drop". The drop is a reflection of the expected net interest income from an investment in similar Agency mortgage-backed securities, net of an implied financing cost, that would be foregone as a result of settling the contract in the later month rather than in the earlier month. The drop between the current settlement month price and the forward settlement month price occurs because in the TBA dollar roll market, the party providing the financing is the party that would retain all principal and interest payments accrued during the financing period. Accordingly, TBA dollar roll income generally represents the economic equivalent of the net interest income earned on the underlying Agency mortgage-backed security less an implied financing cost.

TBA dollar roll transactions are accounted for under GAAP as a series of derivatives transactions. The fair value of TBA derivatives is based on methods similar to those used to value Agency mortgage-backed securities. The Company records TBA derivatives at fair value on its Consolidated Statements of Financial Condition and recognizes periodic changes in fair value in Net gains (losses) on derivatives in the Consolidated Statements of Comprehensive Income (Loss), which includes both unrealized and realized gains and losses on derivatives.

TBA dollar roll income is calculated as the difference in price between two TBA contracts with the same terms but different settlement dates multiplied by the notional amount of the TBA contract. Although accounted for as derivatives, TBA dollar rolls capture the economic equivalent of net interest income, or carry, on the underlying Agency mortgage-backed security (interest income less an implied cost of financing). TBA dollar roll income is reported as a component of Net gains (losses) on derivatives in the Consolidated Statements of Comprehensive Income (Loss).

Premium Amortization Expense

In accordance with GAAP, the Company amortizes or accretes premiums or discounts into interest income for its Agency mortgage-backed securities, excluding interest-only securities, multifamily and reverse mortgages, taking into account estimates of future principal prepayments in the calculation of the effective yield. The Company recalculates the effective yield as differences between anticipated and actual prepayments occur. Using third-party model and market information to project future cash flows and expected remaining lives of securities, the effective interest rate determined for each security is applied as if it had been in place from the date of the security’s acquisition. The amortized cost of the security is then adjusted to the amount that would have existed had the new effective yield been applied since the acquisition date. The adjustment to amortized cost is offset with a charge or credit to interest income. Changes in interest rates and other market factors will impact prepayment speed projections and the amount of premium amortization recognized in any given period.

The Company’s GAAP metrics include the unadjusted impact of amortization and accretion associated with this method. Certain of the Company’s non-GAAP metrics exclude the effect of the PAA, which quantifies the component of premium amortization representing the cumulative impact on prior periods, but not the current period, of quarter-over-quarter changes in estimated long-term CPR.

The following table illustrates the impact of the PAA on premium amortization expense for the Company’s Residential Securities portfolio and residential securities transferred or pledged to securitization vehicles, for the quarters ended September 30, 2026, June 30, 2026 and September 30, 2025:

For the quarters ended

September 30,

2026

June 30,

2026

September 30,

2025

(dollars in thousands)

Premium amortization expense (accretion)

$

18,422

$

52,423

$

36,719

Less: PAA cost (benefit)

(44,518

)

7,081

18,390

Premium amortization expense (excluding PAA)

$

62,940

$

45,342

$

18,329

Economic leverage and economic capital ratios

The Company uses capital coupled with borrowed funds to invest primarily in real estate related investments, earning the spread between the yield on its assets and the cost of its borrowings and hedging activities. The Company’s capital structure is designed to offer an efficient complement of funding sources to generate positive risk-adjusted returns for its stockholders while maintaining appropriate liquidity to support its business and meet the Company’s financial obligations under periods of market stress. To maintain its desired capital profile, the Company utilizes a mix of debt and equity funding. Debt funding may include the use of repurchase agreements, loans, securitizations, participations issued, lines of credit, asset backed lending facilities, corporate bond issuance, convertible bonds or other liabilities. Equity capital primarily consists of common and preferred stock.

The Company’s economic leverage ratio is computed as the sum of recourse debt, cost basis of TBA derivatives outstanding, and net forward purchases (sales) of investments divided by total equity. Recourse debt consists of repurchase agreements, other secured financing, structured repurchase transactions (included within Debt issued by securitization vehicles) and U.S. Treasury securities sold, not yet purchased. Debt issued by securitization vehicles (excluding structured repurchase transactions) and participations issued are non-recourse to us and are excluded from economic leverage.

The following table presents a reconciliation of GAAP debt to economic debt for purposes of calculating the Company’s economic leverage ratio for the periods presented:

As of

September 30,

2026

June 30,

2026

September 30,

2025

Economic leverage ratio reconciliation

(dollars in thousands)

Repurchase agreements

$

85,525,065

$

86,895,874

$

75,118,963

Other secured financing

1,125,000

1,125,000

1,025,000

Debt issued by securitization vehicles

38,380,269

34,366,098

26,601,790

Participations issued

2,200,562

2,553,709

1,831,657

U.S Treasury securities sold, not yet purchased

—

—

2,442,570

Total GAAP debt

$

127,230,896

$

124,940,681

$

107,019,980

Less Non-recourse debt:

Debt issued by securitization vehicles (1)

$

(38,136,634

)

$

(34,114,655

)

$

(26,601,790

)

Participations issued

(2,200,562

)

(2,553,709

)

(1,831,657

)

Total recourse debt

$

86,893,700

$

88,272,317

$

78,586,533

Plus / (Less):

Cost basis of TBA derivatives

$

6,710,766

$

7,169,573

$

3,981,439

Payable for unsettled trades

1,108,206

331,586

2,604,278

Receivable for unsettled trades

(705,160

)

(104,722

)

(185,916

)

Economic debt *

$

94,007,512

$

95,668,754

$

84,986,334

Total equity

$

15,894,386

$

16,978,376

$

14,996,579

Economic leverage ratio *

5.9:1

5.6:1

5.7:1

* Represents a non-GAAP financial measure.

(1) Non-recourse debt excludes debt issued by securitization vehicles related to structured repurchase transactions.

The following table presents a reconciliation of GAAP total assets to economic total assets for purposes of calculating the Company’s economic capital ratio for the periods presented:

As of

September 30,

2026

June 30,

2026

September 30,

2025

Economic capital ratio reconciliation

(dollars in thousands)

Total GAAP assets

$

146,147,474

$

143,741,176

$

125,861,572

Less:

Gross unrealized gains on TBA derivatives (1)

(34,383

)

(50,393

)

(24,074

)

Debt issued by securitization vehicles (2)

(38,136,634

)

(34,114,655

)

(26,601,790

)

Participations issued

(2,200,562

)

(2,553,709

)

(1,831,657

)

Plus:

Implied market value of TBA derivatives

6,488,723

7,216,874

3,991,915

Total economic assets *

$

112,264,618

$

114,239,293

$

101,395,966

Total equity

$

15,894,386

$

16,978,376

$

14,996,579

Economic capital ratio *

14.2

%

14.9

%

14.8

%

* Represents a non-GAAP financial measure.

(1) Included in Derivative assets in the Company’s Consolidated Statements of Financial Condition.

(2) Excludes debt issued by securitization vehicles related to structured repurchase transactions.

Interest income (excluding PAA), economic interest expense and economic net interest income (excluding PAA)

Interest income (excluding PAA) represents interest income excluding the effect of the PAA, and serves as the basis for deriving average yield on interest earning assets (excluding PAA), net interest spread (excluding PAA) and net interest margin (excluding PAA), which are discussed below. The Company believes this measure provides management and investors with additional detail to enhance their understanding of the Company’s operating results and trends by excluding the component of premium amortization expense representing the cumulative impact on prior periods, but not the current period, of quarter-over-quarter changes in estimated long-term prepayment speeds related to the Company’s Agency mortgage-backed securities (other than interest-only securities, multifamily and reverse mortgages), which can obscure underlying trends in the performance of the portfolio.

Economic interest expense includes GAAP interest expense, the net interest component of interest rate swaps (which includes net interest on variation margin related to interest rate swaps) and net interest on initial margin related to interest rate swaps, which is reported in Other, net in the Company’s Consolidated Statements of Comprehensive Income (Loss). The Company uses interest rate swaps to manage its exposure to changing interest rates on its repurchase agreements by economically hedging cash flows associated with these borrowings. Accordingly, adding the net interest component of interest rate swaps to interest expense, as computed in accordance with GAAP, reflects the total contractual interest expense and thus, provides investors with additional information about the cost of the Company's financing strategy. The Company may use market agreed coupon ("MAC") interest rate swaps in which the Company may receive or make a payment at the time of entering into such interest rate swap to compensate for the off-market nature of such interest rate swap. In accordance with GAAP, upfront payments associated with MAC interest rate swaps are not reflected in the net interest component of interest rate swaps in the Company's Consolidated Statements of Comprehensive Income (Loss).

Similarly, economic net interest income (excluding PAA), as computed below, provides investors with additional information to enhance their understanding of the net economics of our primary business operations.

For the quarters ended

September 30,

2026

June 30,

2026

September 30,

2025

Interest income (excluding PAA) reconciliation

(dollars in thousands)

GAAP interest income

$

1,970,425

$

1,812,198

$

1,532,497

Premium amortization adjustment

(44,518

)

7,081

18,390

Interest income (excluding PAA) *

$

1,925,907

$

1,819,279

$

1,550,887

Economic interest expense reconciliation

GAAP interest expense

$

1,426,813

$

1,324,005

$

1,256,747

Add:

Net interest component of interest rate swaps and net interest on initial margin related to interest rate swaps (1)

(104,133

)

(98,841

)

(205,030

)

Economic interest expense *

$

1,322,680

$

1,225,164

$

1,051,717

Economic net interest income (excluding PAA) reconciliation

Interest income (excluding PAA) *

$

1,925,907

$

1,819,279

$

1,550,887

Less:

Economic interest expense *

1,322,680

1,225,164

1,051,717

Economic net interest income (excluding PAA) *

$

603,227

$

594,115

$

499,170

* Represents a non-GAAP financial measure.

(1) Interest on initial margin related to interest rate swaps is reported in Other, net in the Company’s Consolidated Statements of Comprehensive Income (Loss).

Average yield on interest earning assets (excluding PAA), net interest spread (excluding PAA), net interest margin (excluding PAA) and average economic cost of interest bearing liabilities

Net interest spread (excluding PAA), which is the difference between the average yield on interest earning assets (excluding PAA) and the average economic cost of interest bearing liabilities, which represents annualized economic interest expense divided by average interest bearing liabilities, and net interest margin (excluding PAA), which is calculated as the sum of interest income (excluding PAA) plus TBA dollar roll income less economic interest expense divided by the sum of average interest earning assets plus average TBA contract balances, provide management with additional measures of the Company’s profitability that management relies upon in monitoring the performance of the business.

Disclosure of these measures, which are presented below, provides investors with additional detail regarding how management evaluates the Company’s performance.

For the quarters ended

September 30,

2026

June 30,

2026

September 30,

2025

Economic metrics (excluding PAA)

(dollars in thousands)

Average interest earning assets

$

141,338,058

$

133,263,735

$

113,522,223

Interest income (excluding PAA) *

$

1,925,907

$

1,819,279

$

1,550,887

Average yield on interest earning assets (excluding PAA) *

5.45

%

5.46

%

5.46

%

Average interest bearing liabilities

$

129,667,247

$

122,802,541

$

103,994,302

Economic interest expense *

$

1,322,680

$

1,225,164

$

1,051,717

Average economic cost of interest bearing liabilities *

4.03

%

3.96

%

3.96

%

Economic net interest income (excluding PAA) *

$

603,227

$

594,115

$

499,170

Net interest spread (excluding PAA) *

1.42

%

1.50

%

1.50

%

Interest income (excluding PAA) *

$

1,925,907

$

1,819,279

$

1,550,887

TBA dollar roll income

18,803

17,904

9,019

Economic interest expense *

(1,322,680

)

(1,225,164

)

(1,051,717

)

Subtotal

$

622,030

$

612,019

$

508,189

Average interest earnings assets

$

141,338,058

$

133,263,735

$

113,522,223

Average TBA contract balances

5,624,613

6,088,214

6,356,708

Subtotal

$

146,962,671

$

139,351,949

$

119,878,931

Net interest margin (excluding PAA) *

1.69

%

1.76

%

1.70

%

* Represents a non-GAAP financial measure.

SummaryRaising interest rates destroys demand and borrowing capacity, but it cannot drill oil wells, resolve Middle Eastern geopolitical conflicts, or expand refinery throughput.In 1999, the Fed tightened into 4.5%–5.0% GDP, falling unemployment, and surging consumer confidence. Today, the Fed is hiking into sub-3% GDP, rising unemployment, and consumer sentiment near all-time lows.Headline CPI inflation rose throughout the 2000 rate-hiking cycle, easing only with recession; today’s rate hikes may likewise fail to curb oil prices until geopolitical and infrastructure constraints ease.Prior to the dot-com crash, rate-sensitive sectors (REITs, banks, and mortgage lenders) experienced sharp drawdowns before and during early rate hikes as capital chased speculative tech names.Investors who bought rate-sensitive dividend payers at the peak of 1998–1999 pessimism captured massive cash flow and substantially outperformed the S&P 500 from 1999 to 2004.Looking for a helping hand in the market? Members of High Dividend Opportunities get exclusive ideas and guidance to navigate any climate. Learn More » belterz/iStock via Getty Images

Co-authored with Beyond Saving.

The Income Method Mandate: Exploit the rate-hiking panic; accumulate defensive high-yield anchors like Realty Income Corporation (O), Annaly Capital Management, Inc. (NLY), and John Hancock

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of O, NLY, BTO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Beyond Saving, Philip Mause, and Hidden Opportunities, all are supporting contributors for High Dividend Opportunities. Any recommendation posted in this article is not indefinite. We closely monitor all of our positions. We issue Buy and Sell alerts on our recommendations, which are exclusive to our members.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Shares of Annaly Capital Management Inc (NYSE:NLY – Get Free Report) have earned an average recommendation of “Moderate Buy” from the twelve research firms that are currently covering the stock, Marketbeat reports. Four research analysts have rated the stock with a hold rating, seven have issued a buy rating and one has given a strong buy rating to the company. The average twelve-month target price among brokerages that have covered the stock in the last year is $23.61.

Several brokerages recently issued reports on NLY. BTIG Research set a $21.00 price target on Annaly Capital Management and gave the company a “buy” rating in a research note on Tuesday. JPMorgan Chase & Co. lowered their price objective on Annaly Capital Management from $26.00 to $24.00 and set an “overweight” rating on the stock in a research note on Friday, July 24th. Weiss Ratings reaffirmed a “hold (c)” rating on shares of Annaly Capital Management in a report on Tuesday. Piper Sandler cut their target price on Annaly Capital Management from $25.00 to $21.50 and set an “overweight” rating for the company in a research report on Friday. Finally, Zacks Research lowered Annaly Capital Management from a “strong-buy” rating to a “hold” rating in a report on Monday, August 31st.

Get Our Latest Stock Analysis on NLY

Hedge Funds Weigh In On Annaly Capital Management Several hedge funds have recently bought and sold shares of the company. Root Financial Partners LLC raised its position in shares of Annaly Capital Management by 585.6% in the 1st quarter. Root Financial Partners LLC now owns 1,330 shares of the real estate investment trust’s stock valued at $28,000 after buying an additional 1,136 shares in the last quarter. Markowski Investments acquired a new stake in shares of Annaly Capital Management during the 2nd quarter worth approximately $37,000. SHP Wealth Management acquired a new stake in shares of Annaly Capital Management during the 4th quarter worth approximately $43,000. Fourth Dimension Wealth LLC increased its stake in Annaly Capital Management by 30.3% in the second quarter. Fourth Dimension Wealth LLC now owns 2,150 shares of the real estate investment trust’s stock valued at $48,000 after acquiring an additional 500 shares during the last quarter. Finally, Gould Capital LLC increased its stake in Annaly Capital Management by 38.2% in the fourth quarter. Gould Capital LLC now owns 2,245 shares of the real estate investment trust’s stock valued at $50,000 after acquiring an additional 621 shares during the last quarter. 51.56% of the stock is owned by institutional investors. Shares of Annaly Capital Management stock opened at $18.33 on Friday. The stock has a market capitalization of $13.81 billion, a price-to-earnings ratio of 4.59, a price-to-earnings-growth ratio of 1.44 and a beta of 1.21. Annaly Capital Management has a twelve month low of $17.76 and a twelve month high of $24.52. The company has a 50-day simple moving average of $21.76 and a two-hundred day simple moving average of $22.01.

Annaly Capital Management (NYSE:NLY – Get Free Report) last announced its earnings results on Tuesday, July 21st. The real estate investment trust reported $0.79 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.75 by $0.04. Annaly Capital Management had a net margin of 43.66% and a return on equity of 16.00%. The firm had revenue of $1.82 billion for the quarter, compared to analyst estimates of $639.80 million. On average, sell-side analysts anticipate that Annaly Capital Management will post 3.09 earnings per share for the current fiscal year.

Annaly Capital Management Dividend Announcement The business also recently declared a quarterly dividend, which will be paid on Friday, October 30th. Investors of record on Wednesday, September 30th will be paid a $0.75 dividend. This represents a $3.00 dividend on an annualized basis and a yield of 16.4%. The ex-dividend date of this dividend is Wednesday, September 30th. Annaly Capital Management’s payout ratio is 75.19%.

About Annaly Capital Management (Get Free Report)

Annaly Capital Management, Inc is a real estate investment trust that invests in and manages a portfolio of mortgage-related assets. The company’s primary business is focused on generating income from investments in agency mortgage-backed securities, which are guaranteed by a U.S. government-sponsored enterprise or government agency.

In addition to agency securities, Annaly invests in residential credit assets, including non-agency mortgage-backed securities and other residential loans.

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Annaly Capital's 16.9% yield has drawn income investors for years, but three specific metrics will determine whether that $3 annual payout holds or follows the same path as every previous cut in its history.

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Annaly Capital (NYSE:NLY) pays $0.75 per quarter, or $3 a year. At $17.80, that yields a whopping 16.9%. The stock fell 18.87% over the past month. Annaly is a mortgage REIT that borrows short term through repurchase agreements (repo), buys mortgage securities, and keeps the difference between what the bonds pay and what borrowing costs. Three numbers decide whether the dividend holds up.

Spread Pays the Dividend, and Its Cost Resets Every Month In Q2, Annaly’s agency portfolio had a weighted average coupon of 5.11%, repo rate of 3.84%, and net interest margin of 1.76%. Earnings available for distribution (EAD) were $0.79 per share, covering the dividend for the ninth consecutive quarter.

Repo loans averaged only 33 days to maturity, so rising short-term rates increase funding costs quickly. Annaly’s hedges cover 97% of that exposure. Management said:

“We expect to be able to cover the dividend over a period of time. There will be quarters where we’ll out earn it and maybe we might be on top or even a touch below.”

AGNC Investment (NASDAQ:AGNC) runs a wider 2.00% net interest spread but its repo matures in just 13 days.

Book Value Tells You Whether the Dividend Is Earned Book value per share is the scoreboard. Annaly’s book value rose to $20.15 in Q2 from $19.82, after falling from $20.21 in Q1. The 10-year Treasury yield has climbed from 4.56% to 5.27%. Management said book value was off “a little over a percent”. Shares trade about 11.7% below the last reported book value, suggesting the market expects more erosion.

Leverage Multiplies Every Mistake Annaly holds $143.74 billion in assets on $16.93 billion of equity. Economic leverage is 5.6x, and GAAP leverage is 7.4x. AGNC runs 7.4x on tangible book, and its tangible book fell 5.6% in Q1. Annaly’s CEO says the lighter balance sheet is an edge:

“It has contributed to our ability to generate double-digit economic returns while operating with less leverage than our peers.”

Rithm Capital (NYSE:RITM) spreads risk through origination, servicing, and asset management. It held its dividend at $0.25 on EAD of $0.60, though mortgage servicing marks cost it $194.5 million in Q2.

Annaly Has Cut Its Dividend Before Annaly has cut its dividend before. The quarterly payout fell from $0.55 in 2012 to $0.30 by late 2013, from $0.30 in 2018 to $0.22 in 2020, and from $0.88 to $0.65 in 2023. Each cut followed narrowed spreads or book value losses (we listed the seven warning signs that tend to come before a cut like these in a free guide here). The current run of increases began in 2025.

Dividend Variability and the One Number to Track Annaly’s dividend has historically moved with spreads and book value. That variability matters for anyone relying on a fixed check, as does the 18.87% monthly drop. Watch book value per share in the Q3 report against $20.15. If it falls while EAD just covers $0.75, the dividend is paid from capital.

Contact [email protected] for any questions or corrections.

Annaly Capital Management (NLY - Free Report) closed at $18.70 in the latest trading session, marking a -1.01% move from the prior day. The stock fell short of the S&P 500, which registered a gain of 0.2% for the day. Elsewhere, the Dow saw an upswing of 0.04%, while the tech-heavy Nasdaq appreciated by 0.04%.

Shares of the real estate investment trust have depreciated by 16.82% over the course of the past month, underperforming the Finance sector's loss of 4.84%, and the S&P 500's loss of 0.35%.

The investment community will be closely monitoring the performance of Annaly Capital Management in its forthcoming earnings report. The company is scheduled to release its earnings on October 20, 2026. In that report, analysts expect Annaly Capital Management to post earnings of $0.78 per share. This would mark year-over-year growth of 6.85%. At the same time, our most recent consensus estimate is projecting a revenue of $545 million, reflecting a 97.64% rise from the equivalent quarter last year.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $3.09 per share and a revenue of $2.03 billion, indicating changes of +5.82% and +78.78%, respectively, from the former year.

It is also important to note the recent changes to analyst estimates for Annaly Capital Management. These revisions help to show the ever-changing nature of near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Currently, Annaly Capital Management is carrying a Zacks Rank of #3 (Hold).

Digging into valuation, Annaly Capital Management currently has a Forward P/E ratio of 6.12. This represents a discount compared to its industry average Forward P/E of 7.3.

We can additionally observe that NLY currently boasts a PEG ratio of 1.49. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. REIT and Equity Trust stocks are, on average, holding a PEG ratio of 1.1 based on yesterday's closing prices.

The REIT and Equity Trust industry is part of the Finance sector. This industry, currently bearing a Zacks Industry Rank of 225, finds itself in the bottom 9% echelons of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

NEW YORK--(BUSINESS WIRE)--Annaly Capital Management, Inc. Announces Dates of Third Quarter 2026 Financial Results and Conference Call.

In the latest close session, Annaly Capital Management (NLY - Free Report) was down 2.09% at $20.60. This change lagged the S&P 500's 0.03% loss on the day. Meanwhile, the Dow lost 0.31%, and the Nasdaq, a tech-heavy index, added 0.01%.

Shares of the real estate investment trust have depreciated by 7.96% over the course of the past month, underperforming the Finance sector's loss of 2.98%, and the S&P 500's gain of 0.53%.

Investors will be eagerly watching for the performance of Annaly Capital Management in its upcoming earnings disclosure. In that report, analysts expect Annaly Capital Management to post earnings of $0.78 per share. This would mark year-over-year growth of 6.85%. At the same time, our most recent consensus estimate is projecting a revenue of $545 million, reflecting a 97.64% rise from the equivalent quarter last year.

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $3.09 per share and a revenue of $2.03 billion, representing changes of +5.82% and +78.78%, respectively, from the prior year.

Any recent changes to analyst estimates for Annaly Capital Management should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.

Based on our research, we believe these estimate revisions are directly related to near-term stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Annaly Capital Management presently features a Zacks Rank of #3 (Hold).

In terms of valuation, Annaly Capital Management is presently being traded at a Forward P/E ratio of 6.81. This represents a discount compared to its industry average Forward P/E of 7.22.

We can additionally observe that NLY currently boasts a PEG ratio of 1.65. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. The REIT and Equity Trust was holding an average PEG ratio of 1.2 at yesterday's closing price.

The REIT and Equity Trust industry is part of the Finance sector. With its current Zacks Industry Rank of 226, this industry ranks in the bottom 9% of all industries, numbering over 250.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.

The big draw for most investors with Annaly Capital (NLY -1.22%) is its massive 13.7% dividend yield. To put that yield into context, the S&P 500 index (^GSPC +0.17%) has a yield of just about 1%, and the average real estate investment trust (REIT) yields 3.6%. If you are trying to maximize the income your portfolio generates, it would be hard to say no to Annaly Capital's yield, but here's why you might want to anyway.

What does Annaly Capital do? Annaly Capital is a mortgage REIT. It issues stock and debt, using the proceeds to buy mortgages pooled into bond-like securities. It also manages the collection of loan payments, known as mortgage servicing rights. While mortgage servicing tends to provide a reliable income stream, owning mortgages is a more volatile business.

Image source: Getty Images.

Essentially, Annaly makes the difference between its cost of capital and the interest it earns on its mortgage securities. The mREIT's cost of capital fluctuates with interest rates and market conditions on Wall Street. Just looking at the stock's yield today is a snapshot. To fully understand the income you can expect over time, you need to look back at the history. It's not nearly as compelling a story as you might hope, as the chart below highlights.

NLY Dividend data by YCharts

The first thing to note is the purple line, which is Annaly's dividend. The dividend has been highly variable since the company's IPO. If you are trying to live off the income your portfolio generates, Annaly should be a hard sell. That said, the mREIT did just raise its dividend in June, so that's a positive. And it may continue to increase the dividend over the near term, too. But look at the orange line of the graph, which is the effective Fed Funds Rate. Annaly's dividend tends to move in the opposite direction of that line.

A full rate cycle, then, will likely include a period when Annaly's dividend is rising and another when it is falling. If you are trying to time the rate cycle, buying Annaly could be a good income option. But if you are a buy-and-hold dividend investor, Annaly is probably best avoided.

Annaly isn't a bad company; it just isn't a reliable dividend stock The truth is, Annaly Capital has done a good job of creating value for investors if you look at total return, which assumes reinvestment of dividends. However, the dividend has a very clear history of being volatile, which makes it difficult to suggest that the 13%+ yield will provide you with an income stream you can count on to pay your bills.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

When a balance sheet contracts, net investment income drops, forcing distribution cuts and lower market prices. When a portfolio re-expands sustainably, earnings growth pulls valuations back to a premium. NLY expanded its total portfolio from $73 billion in 2023 back to $107 billion in 2026, directly driving its dividend hike from $0.65 to $0.75 per quarter. Rebuilding its asset base and demonstrating sustainable dividend coverage allowed $NLY to transition from a 10–15% discount up to a 10–15% premium to book value.

In the latest trading session, Annaly Capital Management (NLY - Free Report) closed at $22.00, marking a -2.7% move from the previous day. The stock's change was less than the S&P 500's daily loss of 0.59%. Elsewhere, the Dow saw a downswing of 0.6%, while the tech-heavy Nasdaq depreciated by 0.65%.

Shares of the real estate investment trust have depreciated by 2.16% over the course of the past month, underperforming the Finance sector's loss of 1.37%, and the S&P 500's loss of 1.37%.

The investment community will be closely monitoring the performance of Annaly Capital Management in its forthcoming earnings report. The company's upcoming EPS is projected at $0.78, signifying a 6.85% increase compared to the same quarter of the previous year. Meanwhile, the latest consensus estimate predicts the revenue to be $545 million, indicating a 97.64% increase compared to the same quarter of the previous year.

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $3.09 per share and a revenue of $2.03 billion, representing changes of +5.82% and +78.78%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Annaly Capital Management. These revisions help to show the ever-changing nature of near-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. At present, Annaly Capital Management boasts a Zacks Rank of #3 (Hold).

Digging into valuation, Annaly Capital Management currently has a Forward P/E ratio of 7.32. Its industry sports an average Forward P/E of 7.97, so one might conclude that Annaly Capital Management is trading at a discount comparatively.

One should further note that NLY currently holds a PEG ratio of 1.78. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. By the end of yesterday's trading, the REIT and Equity Trust industry had an average PEG ratio of 1.29.

The REIT and Equity Trust industry is part of the Finance sector. This industry, currently bearing a Zacks Industry Rank of 235, finds itself in the bottom 5% echelons of all 250+ industries.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.

Wirestock/iStock via Getty Images

Annaly Capital Management (NLY) has some of our favorite preferred shares in the mortgage REIT sector when they come into our buy range. Today, we’re going over NLY-J (NLY.PR.J). It’s an exceptionally low-risk preferred share with a decent dividend yield. However, investors can find materially higher yields in the sector without taking on materially more risk. At recent prices, around $25.72, NLY-J is in our overpriced range.

Preferred Share NLY-J Let’s go over the good news first. NLY-J carries a risk rating of 1, which is the lowest risk rating we assign to preferred shares. That is an advantage over more risky preferred shares.

We cover plenty of preferred shares that are offering yields around 9% and a handful that are around 10%. However, those higher yields do generally come with more risk. If an investor values taking on the lowest amount of relative risk possible, then NLY-J isn’t a terrible decision. We just think there are better options for investors who are willing to take on a bit more risk. As an example, we recently wrote on the Rithm Capital (RITM) preferred shares.

The company behind the preferred shares is important. Annaly is the largest mortgage REIT and it’s one of the many factors we use when giving a preferred share a risk rating.

Fixed Rate NLY-J has a fixed dividend rate. The annualized dividend rate is $2.2188 per share. At recent prices, that gives investors a stripped yield around 8.63%. That’s not terrible for a risk rating of 1. We just don’t view it as attractive enough at a price of $25.72. That’s where valuation becomes a problem for us:

The REIT Forum

Our buy-under price for NLY-J is $23.83.

Our overpriced range starts at $24.77.

Shares are trading around $25.72.

The recent price is at 107.9% of our buy-under target and close to a dollar above the point where we believe shares would be overpriced.

We don't dislike NLY-J. We dislike paying $25.72 for it.

That's an important distinction to keep in mind. Sometimes investors get too attached to a security and believe it’s a great buy at any price.

It doesn't work that way.

A preferred share can have an excellent risk rating, come from a great company, and offer an attractive yield while still being overpriced. In our view, NLY-J checks all three of those boxes.

NLY-J will pay a fixed-rate dividend indefinitely. That is appealing for investors who want to lock in a relatively high yield without having to worry about the dividend resetting if short-term rates decline. If rates were to fall materially over the next few years, an 8.875% fixed coupon becomes increasingly attractive. However, keep in mind that NLY could also call shares at any point with a 30-day notice after the call protection ends. We don’t want to end up paying well over the call value of $25 just to watch the premium vanish if shares are called when call protection ends.

Call Protection Call protection for shares won’t end until 9/30/2030. Because NLY-J trades above its $25.00 call value, the yield to call is lower than the stripped yield. At recent prices, the annualized yield-to-call is around 8.1%. Again, that's not terrible. An investor earning around 8% from one of the lowest-risk preferred shares in the mortgage REIT sector isn’t a tragedy.

Our goal isn't to find investments that are "not terrible." We're looking for attractive risk-adjusted returns which we regularly find in preferred shares that are in the mortgage REIT space. We regularly write about preferred shares and baby bonds for members of The REIT Forum.

Investors who want to see how that strategy has worked in practice can also see our actual trading history in a recent blog we wrote.

We think transparency is very important. It's easy to say an investment was attractive after the price went up. We'd rather show investors what we actually own and when we bought/sold it. We also attempt to foreshadow those trades when we can to make it easier for investors to see our thought process going in and evaluate if they may want to make a similar trade.

Dividend Accrual NLY-J recently went ex-dividend, so there is very little dividend accrual embedded in the current price:

The REIT Forum

Yes, that’s one penny. This is worth mentioning because we regularly tell investors to look at the stripped price. Investors could look at NLY-J trading well above $25.00 and assume part of the premium is simply dividend accrual.

Not here.

Almost the entire $0.72 premium (minus the entirety of a penny) is actually in the share price. We don’t think investors should be chasing NLY-J at recent prices.

Final Thoughts There isn’t much to dislike about NLY-J outside of the current price.

The risk rating is excellent

It offers a fixed-rate dividend

The stripped yield is 8.63%

Several years of call protection

Those are all attractive traits. The problem is valuation. At $25.72, NLY-J trades at 107.9% of our buy-under target and is well into our overpriced range. If shares declined materially, we'd be happy to reevaluate them. That's precisely why we maintain price targets for our readers. We don't need to decide that NLY-J is a good or bad share for all time. We just need to decide whether shares are attractive at today's price.

They aren’t.

Hsbc Holdings PLC grew its holdings in Annaly Capital Management Inc (NYSE:NLY – Free Report) by 215.8% in the second quarter, according to the company in its most recent Form 13F filing with the Securities & Exchange Commission. The fund owned 858,481 shares of the real estate investment trust’s stock after buying an additional 586,611 shares during the period. Hsbc Holdings PLC owned 0.11% of Annaly Capital Management worth $19,288,000 at the end of the most recent quarter.

Several other hedge funds and other institutional investors also recently made changes to their positions in NLY. HUB Investment Partners LLC raised its stake in Annaly Capital Management by 3.3% in the 2nd quarter. HUB Investment Partners LLC now owns 14,668 shares of the real estate investment trust’s stock valued at $328,000 after acquiring an additional 462 shares during the period. Quadcap Wealth Management LLC increased its holdings in shares of Annaly Capital Management by 2.3% in the first quarter. Quadcap Wealth Management LLC now owns 21,889 shares of the real estate investment trust’s stock valued at $463,000 after purchasing an additional 495 shares during the last quarter. Fourth Dimension Wealth LLC increased its holdings in shares of Annaly Capital Management by 76.9% in the fourth quarter. Fourth Dimension Wealth LLC now owns 1,150 shares of the real estate investment trust’s stock valued at $26,000 after purchasing an additional 500 shares during the last quarter. GWN Securities Inc. raised its position in shares of Annaly Capital Management by 5.0% in the fourth quarter. GWN Securities Inc. now owns 10,811 shares of the real estate investment trust’s stock valued at $242,000 after purchasing an additional 514 shares during the period. Finally, Quadrant Capital Group LLC raised its position in shares of Annaly Capital Management by 1.4% in the third quarter. Quadrant Capital Group LLC now owns 39,282 shares of the real estate investment trust’s stock valued at $794,000 after purchasing an additional 524 shares during the period. 51.56% of the stock is currently owned by institutional investors.

Wall Street Analyst Weigh In Several brokerages recently commented on NLY. BTIG Research set a $24.00 target price on shares of Annaly Capital Management in a report on Wednesday, June 17th. Zacks Research downgraded shares of Annaly Capital Management from a “strong-buy” rating to a “hold” rating in a research report on Monday, August 31st. Piper Sandler boosted their price objective on Annaly Capital Management from $24.50 to $25.00 and gave the stock an “overweight” rating in a report on Thursday, July 2nd. Wells Fargo & Company decreased their target price on Annaly Capital Management from $25.00 to $24.00 and set an “overweight” rating on the stock in a research report on Thursday, July 23rd. Finally, Royal Bank Of Canada reiterated an “outperform” rating and set a $25.00 target price on shares of Annaly Capital Management in a research note on Wednesday, June 3rd. One investment analyst has rated the stock with a Strong Buy rating, seven have issued a Buy rating and four have assigned a Hold rating to the company. According to MarketBeat.com, the stock presently has an average rating of “Moderate Buy” and an average price target of $24.33.

View Our Latest Stock Report on NLY Annaly Capital Management Stock Performance Shares of Annaly Capital Management stock opened at $22.75 on Wednesday. The firm has a 50-day moving average of $22.90 and a 200-day moving average of $22.38. Annaly Capital Management Inc has a 52-week low of $20.00 and a 52-week high of $24.52. The stock has a market cap of $17.15 billion, a PE ratio of 5.70, a PEG ratio of 1.79 and a beta of 1.16.

Annaly Capital Management (NYSE:NLY – Get Free Report) last released its quarterly earnings results on Tuesday, July 21st. The real estate investment trust reported $0.79 EPS for the quarter, topping analysts’ consensus estimates of $0.75 by $0.04. Annaly Capital Management had a net margin of 43.66% and a return on equity of 16.00%. The business had revenue of $1.82 billion for the quarter, compared to analyst estimates of $639.80 million. Equities research analysts predict that Annaly Capital Management Inc will post 3.09 earnings per share for the current fiscal year.

(Free Report)

Annaly Capital Management, Inc is a publicly traded real estate investment trust (REIT) that specializes in generating income through investment in mortgage-related assets. The company’s core business activities include the acquisition, financing, and management of a diversified portfolio of agency and non-agency residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS), and other real estate debt instruments. Annaly seeks to profit from the spread between the interest earned on its mortgage investments and its cost of funds, as well as from capital gains realized through active portfolio management.

Founded in 1997 and headquartered in New York City, Annaly has grown to become one of the largest mortgage REITs in the United States.

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Annaly Capital Management (NYSE:NLY – Get Free Report) and AGNC Investment (NASDAQ:AGNCZ – Get Free Report) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, institutional ownership, dividends, analyst recommendations, risk and earnings.

Analyst Recommendations This is a summary of current ratings and target prices for Annaly Capital Management and AGNC Investment, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score Annaly Capital Management 0 3 7 2 2.92 AGNC Investment 0 0 0 0 0.00 Annaly Capital Management presently has a consensus target price of $24.33, suggesting a potential upside of 7.38%. Given Annaly Capital Management’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Annaly Capital Management is more favorable than AGNC Investment.

Valuation and Earnings This table compares Annaly Capital Management and AGNC Investment”s revenue, earnings per share (EPS) and valuation. Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio Annaly Capital Management $3.18 billion 5.37 $2.03 billion $3.99 5.68 AGNC Investment $2.40 billion N/A N/A N/A N/A Annaly Capital Management has higher revenue and earnings than AGNC Investment.

Profitability This table compares Annaly Capital Management and AGNC Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets Annaly Capital Management 43.66% 16.00% 1.69% AGNC Investment N/A N/A N/A Insider & Institutional Ownership 51.6% of Annaly Capital Management shares are owned by institutional investors. 0.2% of Annaly Capital Management shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary Annaly Capital Management beats AGNC Investment on 10 of the 10 factors compared between the two stocks.

(Get Free Report)

Annaly Capital Management, Inc., a diversified capital manager, engages in mortgage finance. The company invests in agency mortgage-backed securities collateralized by residential mortgages; non-agency residential whole loans and securitized products within the residential and commercial markets; mortgage servicing rights; agency commercial mortgage-backed securities; to-be-announced forward contracts; residential mortgage loans; and agency or private label credit risk transfer securities. It has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders. The company was incorporated in 1996 and is based in New York, New York.

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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.

NEW YORK--(BUSINESS WIRE)--Annaly Capital Management Announces Redemption of all Outstanding Shares of Series I Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock.

Here are three stocks with buy rank and strong value characteristics for investors to consider today, August 6:

Annaly Capital Management, Inc. (NLY - Free Report) : This diversified mortgage financing company carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 3.7% over the last 60 days.

Annaly Capital has a price-to-earnings ratio (P/E) of 7.37, compared with 10.70 for the industry. The company possesses a Value Score  of B.

Industrial and Commercial Bank of China Limited (IDCBY - Free Report) : This banking company carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 4.7% over the last 60 days.

Industrial and Commercial has a price-to-earnings ratio (P/E) of 5.86, compared with 12.40 for the industry. The company possesses a Value Score of A.

Agricultural Bank of China Limited (ACGBY - Free Report) : This banking company carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its current year earnings increasing nearly 6% over the last 60 days.

Agricultural Bank has a price-to-earnings ratio (P/E) of 5.96, compared with 12.40 for the industry. The company possesses a Value Score of B.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Learn more about the Value score and how it is calculated here.

The U.S. economy has remained resilient so far this year, despite facing plenty of challenges along the way. Investors navigated geopolitical tensions, trade uncertainty and shifting expectations for interest rates. While many expected growth to slow sharply, the economy continued to exceed expectations. The labor market remained the biggest source of strength, with initial jobless claims falling to 187,000, one of the lowest readings in decades. The unemployment rate has remained at 4.2%. However, June payroll growth slowed sharply to just 57,000 jobs, showing that businesses are becoming more cautious. Consumer spending held up well, helping businesses maintain steady sales.

Inflation remains a persistent challenge. Though it has cooled from last year's highs, it remains above the Federal Reserve's long-term target of 2%. Meanwhile, oil prices swung sharply before easing again amid geopolitical tensions in the Middle East, briefly raising inflation concerns. The Fed has kept interest rates unchanged in its July policy meeting in the 3.50-3.75% range, choosing to wait for more economic data before making its next move. Higher interest rates continue to weigh on homebuyers, business investment and consumer borrowing. At the same time, geopolitical tensions and tariff-related uncertainties have kept financial markets on edge, making investors think twice before taking bigger risks.

Looking ahead, the biggest risk is that several small problems could be combined into a larger one. Slower hiring, cautious corporate spending, sticky inflation and global trade uncertainties all have the potential to reduce economic momentum. The U.S. economy has performed better than expected this year, yet the second half of the year will likely depend on whether inflation eases further, business confidence improves, and the labor market continues to hold up. The economy is still moving forward, but the path ahead looks much less certain than it did at the start of the year.

Thus, dividend stocks can be an attractive option for prudent investors looking for steady income streams, lower volatility and a cushion against declining share prices in volatile market conditions. Companies that consistently pay dividends are often financially strong and generate reliable cash flows. These companies pay out regular dividends and remain profitable due to their proven business models.

Companies that tend to reward investors with a high dividend payout outperform non-dividend-paying stocks during high market volatility. Let us look at solid dividend payers, such as Community Healthcare Trust (CHCT - Free Report) , Legal & General Group (LGGNY - Free Report) and Annaly Capital Management (NLY - Free Report) .

Community Healthcare Trust

Community Healthcare Trust, headquartered in Franklin, TN, is a real estate investment trust that acquires properties leased to hospitals, physicians, healthcare systems and other healthcare service providers. The company's dividend yield stands at 10.2%, significantly higher than the REIT and Equity Trust - Other industry's average of 4%. Over the past 60 days, the Zacks Consensus Estimate for Community Healthcare Trust's current-year earnings has increased by nearly 2.2%, reflecting improving earnings expectations. Additionally, the Zacks Rank #2 (Buy) company is attractively valued with a price-to-earnings (P/E) ratio of 8.19, well below the S&P 500's average of 22.30. Investors can also review Community Healthcare Trust's dividend history for more insights into its payout track record.

You can see the complete list of today's Zacks #1 Rank stocks here.

Legal & General Group

Legal & General Group is a London, United Kingdom-based provider of life insurance, retirement solutions, investment management and long-term savings products, including pensions and Individual Savings Accounts. The company currently holds a Zacks Rank #2. Its dividend yield of 10% is substantially higher than the Insurance - Multiline industry's average of 1.8%, making it an attractive income-generating stock. Over the past 60 days, the Zacks Consensus Estimate for the company's current-year earnings has moved up nearly 2.7%, signaling improving earnings expectations. Legal & General Group trades at a P/E ratio of 12.97, well below the S&P 500 average of 22.30. Investors may also review Legal & General Group's dividend history to evaluate the consistency of its shareholder payouts.

Annaly Capital Management

Headquartered in New York, NY, Annaly Capital Management is a mortgage real estate investment trust (mREIT) that focuses on owning, managing and financing a diversified portfolio of real estate-related investment securities. The company currently sports a Zacks Rank #1 (Strong Buy). Its dividend yield of 13% edges above the REIT and Equity Trust industry's average of 12.8%, offering an attractive income opportunity for investors. The Zacks Consensus Estimate for Annaly Capital Management's current-year earnings has climbed nearly 3.7% over the past 60 days, reflecting strengthening analyst sentiment. Moreover, the stock trades at an attractive valuation, with a P/E ratio of 7.47 versus the S&P 500's average of 22.30. Investors can also examine Annaly Capital Management's dividend history to assess its long-term payout performance.

Annaly Capital Management (NLY - Free Report) could be a solid choice for investors given its recent upgrade to a Zacks Rank #2 (Buy). This rating change essentially reflects an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.

A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.

Individual investors often find it hard to make decisions based on rating upgrades by Wall Street analysts, since these are mostly driven by subjective factors that are hard to see and measure in real time. In these situations, the Zacks rating system comes in handy because of the power of a changing earnings picture in determining near-term stock price movements.

Therefore, the Zacks rating upgrade for Annaly basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.

Most Powerful Force Impacting Stock PricesThe change in a company's future earnings potential, as reflected in earnings estimate revisions, has proven to be strongly correlated with the near-term price movement of its stock. The influence of institutional investors has a partial contribution to this relationship, as these big professionals use earnings and earnings estimates to calculate the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their bulk investment action then leads to price movement for the stock.

For Annaly, rising earnings estimates and the consequent rating upgrade fundamentally mean an improvement in the company's underlying business. And investors' appreciation of this improving business trend should push the stock higher.

Harnessing the Power of Earnings Estimate RevisionsEmpirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, so it could be truly rewarding if such revisions are tracked for making an investment decision. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.

The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here >>>> .

Earnings Estimate Revisions for AnnalyFor the fiscal year ending December 2026, this real estate investment trust is expected to earn $3.07 per share, which is unchanged compared with the year-ago reported number.

Analysts have been steadily raising their estimates for Annaly. Over the past three months, the Zacks Consensus Estimate for the company has increased 3.2%.

Bottom LineUnlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of "buy" and "sell" ratings for its entire universe of more than 4,000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a "Strong Buy" rating and the next 15% get a "Buy" rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.

You can learn more about the Zacks Rank here >>>

The upgrade of Annaly to a Zacks Rank #2 positions it in the top 20% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.

Key Takeaways Annaly expanded its Agency portfolio by nearly $3 billion to $95 billion in market value.NLY purchased $7.1 billion of loans in Q2, with Residential Credit at $10.4 billion.Annaly's MSR portfolio held $4.1 billion in market value as it grew its seller network. Annaly Capital Management, Inc. (NLY - Free Report) emphasized the strength of its diversified housing finance platform on its second-quarter 2026 earnings call, with management focusing on disciplined capital allocation, conservative leverage and opportunities across Agency securities, Residential Credit and mortgage servicing rights.

Executives highlighted continued dividend coverage, portfolio growth and selective deployment of new capital while addressing macro uncertainty, rate volatility and investor questions around future allocation priorities.

NLY Emphasizes Diversified PlatformCEO and co-chief investment officer David Finkelstein said that the company delivered a 5.5% economic return in the quarter while maintaining conservative economic leverage of 5.6 times. He noted that earnings available for distribution exceeded the dividend for the ninth consecutive quarter, supporting the increase in the quarterly common dividend to $0.75 per share.

NLY reported earnings available for distribution of $0.79 per average common share, beating the Zacks Consensus Estimate of $0.75. Revenues were $488.2 million, missing the Zacks Consensus Estimate of $509 million.

Management stated that portfolio positioning remained focused on balancing attractive returns with risk control as interest rate uncertainty continued. The company ended the quarter with a 97% hedge ratio and maintained a conservative approach to managing rate exposure.

Annaly Expands Agency PortfolioAnnaly increased its Agency portfolio by nearly $3 billion during the quarter, bringing the portfolio to $95 billion in market value. Finkelstein added that Agency capital allocation increased to 57% as the company invested newly raised capital into higher-coupon TBA securities and specified pools.

Management said that Agency spreads benefited from stronger technical conditions, including fixed-income inflows, overseas investor demand and activity in the collateralized mortgage obligation market. The company also adjusted its portfolio by reducing exposure to certain lower-coupon securities and adding higher-coupon opportunities.

Annaly’s executives highlighted continued focus on managing prepayment risk through portfolio construction. They said that specified pools remain an important tool for adding call protection while maintaining flexibility across Agency investments.

NLY Targets Residential Credit GrowthFinkelstein stated that Residential Credit remained an area where the company sees attractive risk-adjusted opportunities. The portfolio ended the quarter at $10.4 billion in market value and represented 22% of dedicated capital.

Michael Fania, co-chief investment officer and head of residential credit, said that Annaly purchased $7.1 billion of loans during the quarter, supported by its correspondent channel and whole loan relationships. He highlighted the company’s expanded sourcing network and operational infrastructure as key advantages.

Fania added that credit quality remained strong, citing a lock pipeline with a 765 FICO score and 67% combined loan-to-value ratio. He said that the company remains disciplined on pricing and return targets despite increased market competition.

Annaly Builds MSR FlexibilityAnnaly’s Mortgage Servicing Rights portfolio remained relatively stable at $4.1 billion in market value, representing 21% of dedicated capital. Management said that the business continued to benefit from its operating-light structure and use of sub-servicing partners.

Ken Adler, head of mortgage servicing rights and portfolio analytics, said that the company’s model allows it to participate in MSR transactions without the same operational requirements as traditional servicers. He noted that this structure supports flexibility when sourcing assets.

Adler also highlighted growth in the flow purchase channel, saying the company has expanded its seller network and uses detailed pricing analytics to evaluate MSR opportunities.

NLY Addresses Capital AllocationDuring Q&A, a Piper Sandler analyst asked where incremental capital would be deployed across the company’s three strategies. Finkelstein said that Residential Credit offered strong opportunities, while Agency investments remained attractive because of favorable market conditions.

Finkelstein added that the company’s recent capital raises were designed to support growth in Residential Credit and MSR while maintaining disciplined valuation standards. He noted that capital raised over the prior two years helped expand these businesses.

A UBS analyst asked about mortgage spreads and market uncertainty. Management responded that low volatility, strong demand and supply conditions were key factors influencing the current investment environment.

Annaly Maintains Strategic FocusAnnaly entered the second half of 2026 focused on selective growth across its three investment strategies. Management emphasized scale, liquidity and capital discipline as central components of its approach.

The company ended the quarter with $9.6 billion of assets available for financing, including cash and unencumbered Agency mortgage-backed securities, providing additional financial flexibility.

Executives continued to prioritize opportunities where the company can deploy capital while maintaining conservative risk controls and supporting earnings distribution.

NLY’s Zacks Rank and Style ScoreNLY carries a Zacks Rank #3 (Hold) at present, which indicates that the stock’s current earnings estimate revision trend is consistent with a neutral outlook. The Zacks Rank can change as analysts update earnings estimates following quarterly results. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has a Value Score of C, a Growth Score of F, a Momentum Score of A and a VGM Score of D. The Zacks Style Score evaluates value, growth, momentum and combined characteristics, with higher grades indicating stronger attributes within each style category.