NEW YORK, July 18, 2026, 11:22 EDT
Annaly Capital Management, Inc. NYSE:NLY starts earnings week carrying a 13.0% forward yield and little margin for mistakes. U.S. markets did not trade on Saturday. The stock closed Friday at $23.01, falling 1.75%. This leaves Annaly 16.1% higher than its March book value.
The premium is significant as the increased dividend nearly matches all distributable earnings. Annaly increased its quarterly dividend to $0.75 from $0.70. Earnings available for distribution in the first quarter, or EAD, came to $0.76 per share.
FactSet Research Systems Inc. NYSE:FDS sets the preliminary consensus for Q2 per-share earnings at $0.75. This figure is identical to the latest announced payout. If earnings available for distribution meet this level, the dividend would be fully covered with no surplus.
The figures clearly show the outcome of Tuesday’s test.
| Investor test | Before increase | After increase / Q2 test |
|---|---|---|
| Quarterly dividend | $0.70 | $0.75, a 7.1% rise |
| Q1 EAD cushion | $0.06 a share | $0.01 a share |
| Q1 payout coverage | 1.09x | 1.01x |
| Q2 per-share consensus | — | Preliminary $0.75 |
| Price to book | — | 1.16x March book |
Annaly’s EAD is a non-GAAP metric. The Q2 consensus is an early estimate. Figures are based on data from Friday’s close and company disclosures.
The previous week showed mixed performance. Annaly ended Monday at $22.53 and reached $23.42 by Thursday. Shares declined 1.75% on Friday. Agency competitor AGNC Investment Corp. NASDAQ:AGNC dropped 1.8% the same day.
JPMorgan Chase & Co. NYSE:JPM analyst Richard Shane on Friday lifted his price target to $26, up from $24, while maintaining an Overweight rating. Shane stated that markets are “bracing for higher-for-longer, and potentially higher-from here.” TipRanks
The target represents a 13.0% increase from Friday’s closing price. FactSet’s consensus target stands at $24.45, which is just 6.3% above Friday’s finish. That average offers less potential than the dividend yield indicates.
Interest rates are still the main focus. The U.S. 30-year mortgage rate increased by six basis points to 6.55% on Thursday. The 10-year Treasury yield ended Friday close to 4.55%.
Elevated mortgage rates may limit refinancing activity and bolster servicing-right values. However, a less steep yield curve can continue to pressure carry on leveraged mortgage assets. JPMorgan described the impact of higher rates as a “double-edged sword” for residential mortgage REITs. TipRanks
Annaly’s diversified portfolio brings some balance. Agency assets made up $92.2 billion, or 86% of its portfolio as of March. These assets accounted for 56% of allocated capital. The residential credit segment used 23% of capital, and servicing rights accounted for 21%.
However, June saw mounting challenges. Annaly stated the Bloomberg U.S. MBS Index recorded a negative excess return of 20 basis points. Short-term Treasury yields climbed as investors considered the likelihood of rate hikes later in the year.
Chief Executive David Finkelstein stated the platform provides “durable cash flows and superior risk-adjusted returns.” Results on Tuesday will put that assertion to the test amid a higher valuation and reduced dividend buffer. annaly.com
Annaly will release results after Tuesday’s market close, with its earnings call scheduled for Wednesday at 9 a.m. EDT. Key metrics to watch include EAD, book value, leverage, and net interest margin. Investors may monitor issuance activity following a $509 million at-the-market raise in the first quarter.
Risks are still evident. Annaly’s March analysis projected that a 25-basis-point increase in rates would lower net asset value by 1.5%. An MBS spread widening of 15 basis points would decrease it by 5.5%. The projection did not include any active portfolio adjustments.
The July 31 dividend is confirmed. Tuesday will reveal if the valuation premium remains.
Related articles: NYSE:JPM
