How Annaly's Shift to Higher Coupon MBS May Shape Returns for NLY Investors

• Annaly Capital Management has drawn renewed attention following its repositioning toward higher coupon allocations within its Agency MBS portfolio, a move intended to enhance economic returns and net margins amid shifting industry conditions.
• This active portfolio adjustment comes as mortgage REITs face volatility in mortgage rates, yet recent industry improvement in refinancing and purchase activity may help ease operational and financial pressures for Annaly and its peers.
• We'll examine how Annaly's focus on higher coupon segments could influence its investment outlook and long-term earnings potential.

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Annaly Capital Management Investment Narrative Recap

To be a shareholder in Annaly Capital Management, you need confidence in the firm’s ability to manage interest rate volatility within the mortgage-backed securities market, while sustaining its high dividend payout. The recent analyst coverage and price target updates have not materially changed the immediate catalyst for Annaly, which remains its portfolio shift toward higher coupon Agency MBS, or altered the biggest risk: the earnings pressure from fluctuating interest rates and wide mortgage spreads.

One highly relevant recent announcement is Annaly’s reaffirmation of its Q3 2025 dividend at US$0.70 per common share despite recent declines in net income. This underscores management’s focus on maintaining shareholder value while the company seeks to capitalize on improved activity in refinancing and purchase originations. In contrast, investors should be aware that persistent elevated hedging costs could...

Read the full narrative on Annaly Capital Management (it's free!)

Annaly Capital Management's narrative projects $3.4 billion revenue and $3.2 billion earnings by 2028. This requires 46.9% yearly revenue growth and a $2.6 billion earnings increase from $575.1 million today.

Uncover how Annaly Capital Management's forecasts yield a $21.48 fair value, a 3% upside to its current price.

Exploring Other Perspectives

The Simply Wall St Community’s 11 fair value estimates for Annaly Capital span from US$16 to US$33.85, signaling a broad mix of outlooks. Many see potential uplift, but the industry-wide volatility in mortgage rates remains a point every investor should consider when weighing Annaly’s prospects.

Explore 11 other fair value estimates on Annaly Capital Management - why the stock might be worth as much as 62% more than the current price!

Build Your Own Annaly Capital Management Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Annaly Capital Management research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Annaly Capital Management research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Annaly Capital Management's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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