Research · Sep 3, 2026
[NLY] Annaly Capital Thesis 2026: Agency MBS Spread Cycle Drives Mortgage REIT Distribution Stability
Annaly Capital Management Inc. (NYSE: NLY) FY2025 net interest income ~$1.0-1.2B (+5-15%) with adj. EPS ~$2.85-3.20 reflecting continued post-2024 ~$72-76B aggregate Agency Mortgage-Backed Securities (Agency MBS) portfolio (~95%+ aggregate fixed-rate Agency MBS pass-through) + selected continued post-2024 ~$8-10B aggregate Mortgage Servicing Rights (MSR) + selected various ~$5-7B aggregate Residential Credit + selected various ~$50-60M aggregate Middle Market Lending portfolios + selected post-2024 ~6.5-7.0% net interest margin spread under continued President + CEO David Finkelstein since 2017 (~8-year tenure as Annaly CEO). One of the largest US Mortgage Real Estate Investment Trusts (mREITs). Founded 1997 as Annaly Mortgage Management in New York City by Michael Farrell + selected various FBR Capital Markets predecessor founding members (~28-year heritage); selected post-1997 NYSE direct listing IPO; selected post-2013 ~$874M aggregate CreXus Investment Corp acquisition; selected post-2016 ~$1.5B aggregate Hatteras Financial Corp acquisition; selected post-2017 David Finkelstein CEO appointment + selected post-Michael Farrell retirement; selected post-2018 selected various MSR portfolio expansion. Headquartered in New York City; ~290+ employees globally with ~$1.0-1.2B net interest income. Three primary investment portfolios: Agency MBS Portfolio (~85-90%; ~$72-76B), Mortgage Servicing Rights Portfolio (~5-10%; ~$8-10B), Residential Credit + Middle Market Lending (~5%; ~$5-7B + ~$50-60M). Geographic + asset mix: United States ~95%+ + selected various international ~5%. Agency MBS portfolio + spread cycle: ~$72-76B aggregate Agency MBS portfolio; ~95%+ aggregate fixed-rate Agency MBS pass-through; ~6.5-7.0% net interest margin spread (selected post-2024 spread recovery vs ~5.5% FY2024 NIM trough); ~7.0-7.5x aggregate leverage (selected continued post-2024 conservative leverage vs historical 7-9x); selected continued post-2024 MSR hedge supporting selected continued spread cycle stability. MSR + Residential Credit + Middle Market Lending: ~$8-10B aggregate MSR portfolio; ~$5-7B aggregate Residential Credit; ~$50-60M aggregate Middle Market Lending. President + CEO David Finkelstein since 2017 (~8-year tenure); CFO Serena Wolfe. Capital return: ~$2.60 annual dividend FY2025 (~+0% growth; ~25-year continuous dividend track); modest opportunistic buybacks; aggregate capital return ~$1.5-2B; net leverage ratio ~7.0-7.5x book equity; ~$11-12B aggregate book equity. FY2026 thesis: Agency MBS spread cycle + MSR + Residential Credit + Middle Market Lending diversification + ~$2.60 annual dividend + ~25-year continuous dividend track + ~$1.5-2.1B aggregate annual capital return + selected continued post-2024 ~7.0-7.5x conservative leverage. Risks: Agency MBS spread cyclical, Federal Reserve interest rate cycle, AGNC Investment + Two Harbors + Western Asset Mortgage competition, MSR mark-to-market volatility, leverage adjustment risk.