Annaly Capital Management

NLY

Market cap $15.9B

Two weeks ago, I said that one of my favorite stocks right now is Pfizer (PFE). The pharmaceutical giant is in the middle of a transformational period with the goal to return to growth by 2029.

In the most recent trading session, Annaly Capital Management (NLY) closed at $21.85, indicating a +1.16% shift from the previous trading day.

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Annaly Capital faces potential NAV erosion from rising rates and term spread compression but currently trades near its historical valuation premium versus peers. Lower hedge ratios have increased NLY's interest rate sensitivity, worsening the outlook if policy rates rise or stay elevated. Ongoing equity issuance dilutes shareholders but is partly offset by redeployment into higher‑yielding assets instead of lower‑yield agency MBS.

Annaly Capital Management, Inc. maintains its $0.70 per-share dividend, supported by growing net interest spread and strong earnings coverage. NLY's net interest spread improved for the fourth consecutive time in the last year, reaching 1.07%, driven by lower financing costs and stable asset yields. NLY shares trade at a 9% premium to book value, reflecting improved spreads and expectations of future rate cuts benefiting MBS investors.

Will NLY's payout strategy, liquidity position and mortgage REIT structure be enough to sustain its 12.9% dividend yield? Let us discuss.

Annaly (NLY) reported earnings 30 days ago. What's next for the stock?

REITs are required to distribute 90%+ of taxable income, which is why their yields run well above the broad market.

I highlight five dividend stocks—HTO, ES, SNY, NLY, and AMCR—trading below fair value, each with strong balance sheets and good potential growth prospects. Each stock is projected to deliver double-digit average annual total returns (11.6%–20%) through 2030, with yields averaging nearly 7%. Scenario modeling incorporates expected EPS growth, dividend growth, and target P/E multiples, supporting robust total return forecasts even in recessionary or inflationary environments.

More than 1,500 stocks have reported earnings since the current season began in mid-April, and the average stock that has reported has seen an average absolute one-day share price reaction of roughly 7%. The last time we saw earnings vol spike was during the Financial Crisis bear market, when stocks were tanking. This time around, we're seeing earnings vol increase during a strong AI-driven bull market. Tech stocks are seeing record earnings day volatility as investors and traders presumably make snap judgements about AI's future impact on the bottom line.