Annaly Capital Management, Inc.

Annaly reported second-quarter 2026 book value per share of $20.15, up 1.7% from the prior quarter. Economic return was 5.5% for the quarter, or 6.9% for the first half, including the $0.75 dividend. Earnings available for distribution was $0.79 per share, up $0.03 sequentially and above the dividend for the ninth consecutive quarter. Net interest margin increased 5 basis points to 1.76%, net interest spread improved 8 basis points to 1.5%, and average repo rates declined 6 basis points to 3.84%. Economic leverage was 5.6x versus 5.7x in Q1, and Annaly raised roughly $450 million in equity through its ATM program. Forward-looking commentary was constructive but not formal guidance: management said it expects to remain modestly ahead of the dividend over time, sees Agency returns in the mid-teens levered range, believes Residential Credit offers the best risk-adjusted returns, and said MSR is performing ahead of expectations. As of Friday after quarter end, management said book value was off a little over 1% and economic return was off roughly 0.5%.

David Finkelstein emphasized that Annaly’s diversified housing finance model performed well despite a tougher rate backdrop, with lower volatility helping portfolio returns. He said the firm has strong line of sight to dividend coverage, noting the board was methodical about the dividend increase and wanted it to be earnable over time. Strategically, he framed Annaly as an operating-light, capital-allocation platform that can invest across Agency, Residential Credit, and MSR without depending on loan origination volumes. His tone was confident and constructive, especially on the firm’s ability to deploy capital selectively and generate what he described as durable economic returns.

Serena Wolfe focused on the quarter’s financial drivers: higher Agency asset yields, stronger securitization activity in Residential Credit, and lower funding costs. She highlighted book value per share of $20.15, EAD of $0.79 per share, NIM of 1.76%, NIS of 1.5%, average repo of 3.84%, and economic leverage of 5.6x. She also pointed to liquidity and financing capacity, including $8 billion of unencumbered assets, $5.5 billion in cash and unencumbered Agency MBS, and $9.6 billion of total assets available for financing, up about $580 million from Q1. She noted OpEx-to-equity rose to 1.4% due in part to elevated expenses, but expected those expenses to moderate.

Analysts pressed management on dividend coverage, incremental capital allocation, mortgage spread uncertainty, Residential Credit sourcing, MSR opportunities, and equity issuance at the current stock price. Management said the dividend was set conservatively and should be earnable over the foreseeable future, while noting current market returns appear supportive: agency about 14%-16%, Resi Credit above 15%, and MSR above 13% on warehouse financing. On capital allocation, David said the marginal dollar would likely go first to Agency, with additional Resi Credit deployment as underwriting allows, while MSR remains attractive. On sourcing and competitive positioning, management said its broad correspondent network, sub-servicer model, and pricing/technology capabilities give it an edge in Residential Credit and MSR, and that it will remain selective in raising equity, only doing so when it is accretive and the market can absorb it.