Annaly Capital's Dividend Increase Amid Total Return Focus
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 12 2017
0mins
Source: SeekingAlpha
Annaly Capital Management Inc. has seen its stock price rise by 3.00%, reaching a 20-day high, as the company continues to attract investors with its competitive 12.8% dividend yield.
The recent increase in Annaly's dividend, while appealing, highlights the company's long-term strategy focused on total returns rather than consistent income generation. Despite the attractive yield, the volatility of its dividends poses risks for income-dependent investors, suggesting that Annaly may not be the best choice for those seeking stable income.
Investors should carefully evaluate their strategies, considering Annaly's performance against the S&P 500 index, as the company has outperformed the index since its IPO, but its dividend reliability remains questionable.
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Analyst Views on NLY
Wall Street analysts forecast NLY stock price to rise
8 Analyst Rating
6 Buy
2 Hold
0 Sell
Strong Buy
Current: 22.160
Low
21.50
Averages
23.09
High
25.00
Current: 22.160
Low
21.50
Averages
23.09
High
25.00
About NLY
Annaly Capital Management, Inc. is a diversified capital manager with investment strategies across mortgage finance. It owns a portfolio of real estate related investments, including mortgage pass-through certificates, collateralized mortgage obligations, credit risk transfer (CRT) securities, and other securities representing interests in or obligations backed by pools of mortgage loans, residential mortgage loans and mortgage servicing rights. Its investment groups include Annaly Agency Group, Annaly Residential Credit Group, and Annaly Mortgage Servicing Rights Group. Annaly Agency Group invests in agency mortgage-backed securities collateralized by residential mortgages. Annaly Residential Credit Group invests in non-agency residential mortgage assets within residential and commercial markets. Annaly Mortgage Servicing Rights Group invests in MSR, which provides the right to service residential mortgage loans in exchange for a portion of the interest payments made on the loans.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Annaly Capital Management Raises Dividend to 13.6%
- Dividend Increase: Annaly Capital Management has raised its dividend from $0.70 to $0.75 per share, marking a 7.1% increase that boosts its forward dividend yield to 13.6%, significantly higher than the S&P 500's 1.1%, indicating strong financial performance and a commitment to shareholder value.
- Earnings Improvement: The company reported earnings available for distribution (EAD) of $0.76 per share in Q1, up from $0.74 in the previous quarter and $0.72 a year ago, reflecting the robust performance of its diversified housing finance portfolio and enhancing its dividend capacity.
- Portfolio Diversification: Annaly's investment strategy includes non-agency residential mortgage assets and mortgage servicing rights, with its residential credit portfolio expanding by 30% to $10.3 billion in Q1, demonstrating its ability to capitalize on investment opportunities in the current market environment.
- Risk and Reward: While Annaly has a history of dividend cuts, its current high yield and ongoing earnings growth make it an attractive option for risk-tolerant investors seeking income, particularly in a landscape where stable returns are increasingly sought after.
See More
Annaly Capital Management Increases Dividend by 7.1%
- Dividend Increase: Annaly Capital Management has raised its dividend by 7.1%, increasing the payout from $0.70 to $0.75 per share, which boosts the forward dividend yield to 13.6%, significantly higher than the S&P 500's 1.1%, indicating strong performance in the current market environment.
- Earnings Improvement: The company reported earnings available for distribution (EAD) of $0.76 per share in Q1, up from $0.74 in the previous quarter and $0.72 a year ago, reflecting the robust performance of its diversified housing finance portfolio and enhancing shareholder value.
- Diversified Investment Strategy: Annaly's investment approach includes non-agency residential mortgage assets and mortgage servicing rights, allowing it to adapt flexibly to market conditions and seize the best investment opportunities, with its residential credit portfolio growing by 30% to $10.3 billion in Q1.
- Capital Raising for Growth: The company raised $510 million in equity during Q1 to capitalize on market opportunities to expand its residential credit and MSR portfolios, demonstrating its commitment to maintaining competitiveness in a growing market.
See More
Annaly Capital Management Raises Dividend to $0.75
- Dividend Increase: Annaly Capital Management has raised its common stock cash dividend for Q2 2026 from $0.70 to $0.75 per share, reflecting the strong performance of its diversified housing finance portfolio and expected to enhance shareholder value.
- Payment Schedule: The new dividend will be payable on July 31, 2026, to common shareholders of record as of June 30, 2026, with the ex-dividend date set for June 30, ensuring timely returns for shareholders.
- Management Confidence: CEO David Finkelstein remarked that the dividend increase underscores the company's durable cash flows and superior risk-adjusted returns, highlighting its disciplined portfolio construction and proactive hedging strategies.
- Company Overview: Annaly is a leading diversified capital manager focused on mortgage finance, aiming to optimize shareholder returns through prudent management of its diversified investment strategies and has elected to be taxed as a REIT for federal income tax purposes.
See More
Annaly Capital's High Dividend Yield and Risk Management
- High Dividend Appeal: Annaly Capital boasts a striking 12.9% dividend yield, significantly surpassing the S&P 500's 1.1% and the average REIT's 3.6%, attracting investor interest while indicating potential interest rate risks.
- Interest Rate Risk Management: As of Q1 2026, 87% of Annaly's portfolio was hedged, down from 90% at the end of 2025, reflecting the company's cautious approach to interest rate volatility, which supports its ability to maintain dividend payments.
- Dividend Volatility: Despite the attractive current yield, Annaly's dividend has a history of volatility, prompting long-term investors to exercise caution, particularly those relying on dividends for living expenses who may face risks.
- Total Return Performance: Since its IPO, Annaly's stock has outperformed the S&P 500 in total return, yet both its stock price and dividend are lower than they were a decade ago, indicating that without reinvesting dividends, investors may end up with reduced income and capital.
See More
Analysis of Annaly Capital's 12.9% Dividend Yield
- Dividend Yield Comparison: Annaly Capital boasts a striking 12.9% dividend yield, significantly higher than the S&P 500's 1.1% and the average REIT's 3.6%, indicating its attractiveness but also inherent risks.
- Interest Rate Risk Management: As of Q1 2026, 87% of the company's portfolio was hedged, down from 90% at the end of 2025, reflecting a cautious approach to interest rate volatility aimed at protecting dividend payments.
- Complexity of Dividend Payments: Annaly adopted a conservative hedging strategy throughout the quarter to navigate high volatility, suggesting that the company can maintain its dividend even amid significant rate fluctuations.
- Long-term Investment Risks: While the current dividend yield is appealing, historical volatility warns long-term investors to tread carefully, as both the dividend and stock price are lower than they were a decade ago, indicating potential income and capital erosion for dividend-dependent investors.
See More
Key Considerations for Mortgage REIT Investors
- High Yield Risks: Annaly Capital and AGNC Investment boast dividend yields of 13.05% and 14.10%, respectively, which are attractive but come with significant volatility in dividend history, making them potentially unsuitable for income-dependent investors.
- Return Analysis: Despite the dividend fluctuations, long-term investors who reinvest dividends have seen total returns from Annaly and AGNC comparable to the S&P 500, indicating their diversification value in asset allocation strategies.
- Business Model Differences: AGNC focuses on owning and managing agency mortgage securities guaranteed by entities like Fannie Mae, while Annaly operates a more diversified model that includes non-agency mortgages and mortgage servicing, providing a more stable cash flow.
- Economic Return Performance: In Q1 2026, AGNC reported a negative economic return of 1.8%, while Annaly achieved a positive economic return of 1.5%, highlighting the differing performances of the two mREITs amid market volatility, necessitating investor preference based on risk tolerance.
See More
Annaly Capital Management Raises Dividend to 13.6%
- Dividend Increase: Annaly Capital Management has raised its dividend from $0.70 to $0.75 per share, marking a 7.1% increase that boosts its forward dividend yield to 13.6%, significantly higher than the S&P 500's 1.1%, indicating strong financial performance and a commitment to shareholder value.
- Earnings Improvement: The company reported earnings available for distribution (EAD) of $0.76 per share in Q1, up from $0.74 in the previous quarter and $0.72 a year ago, reflecting the robust performance of its diversified housing finance portfolio and enhancing its dividend capacity.
- Portfolio Diversification: Annaly's investment strategy includes non-agency residential mortgage assets and mortgage servicing rights, with its residential credit portfolio expanding by 30% to $10.3 billion in Q1, demonstrating its ability to capitalize on investment opportunities in the current market environment.
- Risk and Reward: While Annaly has a history of dividend cuts, its current high yield and ongoing earnings growth make it an attractive option for risk-tolerant investors seeking income, particularly in a landscape where stable returns are increasingly sought after.
See More
Annaly Capital Management Increases Dividend by 7.1%
- Dividend Increase: Annaly Capital Management has raised its dividend by 7.1%, increasing the payout from $0.70 to $0.75 per share, which boosts the forward dividend yield to 13.6%, significantly higher than the S&P 500's 1.1%, indicating strong performance in the current market environment.
- Earnings Improvement: The company reported earnings available for distribution (EAD) of $0.76 per share in Q1, up from $0.74 in the previous quarter and $0.72 a year ago, reflecting the robust performance of its diversified housing finance portfolio and enhancing shareholder value.
- Diversified Investment Strategy: Annaly's investment approach includes non-agency residential mortgage assets and mortgage servicing rights, allowing it to adapt flexibly to market conditions and seize the best investment opportunities, with its residential credit portfolio growing by 30% to $10.3 billion in Q1.
- Capital Raising for Growth: The company raised $510 million in equity during Q1 to capitalize on market opportunities to expand its residential credit and MSR portfolios, demonstrating its commitment to maintaining competitiveness in a growing market.
See More
Annaly Capital Management Raises Dividend to $0.75
- Dividend Increase: Annaly Capital Management has raised its common stock cash dividend for Q2 2026 from $0.70 to $0.75 per share, reflecting the strong performance of its diversified housing finance portfolio and expected to enhance shareholder value.
- Payment Schedule: The new dividend will be payable on July 31, 2026, to common shareholders of record as of June 30, 2026, with the ex-dividend date set for June 30, ensuring timely returns for shareholders.
- Management Confidence: CEO David Finkelstein remarked that the dividend increase underscores the company's durable cash flows and superior risk-adjusted returns, highlighting its disciplined portfolio construction and proactive hedging strategies.
- Company Overview: Annaly is a leading diversified capital manager focused on mortgage finance, aiming to optimize shareholder returns through prudent management of its diversified investment strategies and has elected to be taxed as a REIT for federal income tax purposes.
See More
Annaly Capital's High Dividend Yield and Risk Management
- High Dividend Appeal: Annaly Capital boasts a striking 12.9% dividend yield, significantly surpassing the S&P 500's 1.1% and the average REIT's 3.6%, attracting investor interest while indicating potential interest rate risks.
- Interest Rate Risk Management: As of Q1 2026, 87% of Annaly's portfolio was hedged, down from 90% at the end of 2025, reflecting the company's cautious approach to interest rate volatility, which supports its ability to maintain dividend payments.
- Dividend Volatility: Despite the attractive current yield, Annaly's dividend has a history of volatility, prompting long-term investors to exercise caution, particularly those relying on dividends for living expenses who may face risks.
- Total Return Performance: Since its IPO, Annaly's stock has outperformed the S&P 500 in total return, yet both its stock price and dividend are lower than they were a decade ago, indicating that without reinvesting dividends, investors may end up with reduced income and capital.
See More
Analysis of Annaly Capital's 12.9% Dividend Yield
- Dividend Yield Comparison: Annaly Capital boasts a striking 12.9% dividend yield, significantly higher than the S&P 500's 1.1% and the average REIT's 3.6%, indicating its attractiveness but also inherent risks.
- Interest Rate Risk Management: As of Q1 2026, 87% of the company's portfolio was hedged, down from 90% at the end of 2025, reflecting a cautious approach to interest rate volatility aimed at protecting dividend payments.
- Complexity of Dividend Payments: Annaly adopted a conservative hedging strategy throughout the quarter to navigate high volatility, suggesting that the company can maintain its dividend even amid significant rate fluctuations.
- Long-term Investment Risks: While the current dividend yield is appealing, historical volatility warns long-term investors to tread carefully, as both the dividend and stock price are lower than they were a decade ago, indicating potential income and capital erosion for dividend-dependent investors.
See More
Key Considerations for Mortgage REIT Investors
- High Yield Risks: Annaly Capital and AGNC Investment boast dividend yields of 13.05% and 14.10%, respectively, which are attractive but come with significant volatility in dividend history, making them potentially unsuitable for income-dependent investors.
- Return Analysis: Despite the dividend fluctuations, long-term investors who reinvest dividends have seen total returns from Annaly and AGNC comparable to the S&P 500, indicating their diversification value in asset allocation strategies.
- Business Model Differences: AGNC focuses on owning and managing agency mortgage securities guaranteed by entities like Fannie Mae, while Annaly operates a more diversified model that includes non-agency mortgages and mortgage servicing, providing a more stable cash flow.
- Economic Return Performance: In Q1 2026, AGNC reported a negative economic return of 1.8%, while Annaly achieved a positive economic return of 1.5%, highlighting the differing performances of the two mREITs amid market volatility, necessitating investor preference based on risk tolerance.
See More
