Annaly Capital Management's Recent Market and Financial Performance#
Annaly Capital Management, Inc. (NLY currently trades at $19.65, reflecting a slight intraday decline of -0.35%. Despite this modest price movement, the company maintains a substantial market capitalization of approximately $11.89 billion. Under the leadership of CEO David L. Finkelstein, Annaly continues to navigate a complex interest rate environment while delivering shareholder returns through its notably high dividend yield.
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The company’s trailing twelve months (TTM) data reveals a dividend yield of 13.74%, distributed as a quarterly dividend of $0.70 most recently declared and paid in July 2025. This yield stands out in the real estate investment trust (REIT) and mortgage finance sectors, attracting income-focused investors. However, the payout ratio of 232.9% raises questions about the sustainability of these dividends, suggesting that dividends significantly exceed reported earnings, an issue warranting close monitoring.
Financial Results: A Mixed Picture of Recovery and Strategic Challenges#
Annaly’s fiscal year 2024 results indicate a net income of $1.0 billion, a sharp turnaround from a net loss of $1.64 billion in 2023. This represents a substantial net income growth of +160.97% year-over-year, signaling improved operational performance and market conditions. Revenue for 2024 reached $1.2 billion, rebounding from negative revenue figures in 2023, which were reported at -$1.4 billion due to accounting or market valuation adjustments.
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Operating income, however, showed a significant loss of -$5.65 billion in 2024, contrasting with a positive $1.82 billion in 2022, reflecting potentially large mark-to-market adjustments or non-cash charges typical in mortgage REITs amid volatile interest rates. The gross profit ratio at 100% for 2024 underscores that cost of revenue was reported as zero, consistent with the company’s business model focused on interest income rather than direct product costs.
Key Financial Metrics Table#
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Revenue | $1.2B | -$1.4B | $1.95B |
| Net Income | $1.0B | -$1.64B | $1.73B |
| Operating Income | -$5.65B | $0 | $1.82B |
| Dividend per Share | $2.70 | $2.70 | $2.70 |
| Dividend Yield | 13.74% | N/A | N/A |
Balance Sheet and Liquidity Position#
Annaly’s balance sheet as of December 31, 2024, shows significant asset growth to $103.56 billion, up from $93.23 billion in 2023, driven by expanding mortgage-backed securities portfolios. Total liabilities increased to $90.86 billion, with long-term debt rising to $20.7 billion from $12.7 billion the prior year. This leverage expansion aligns with the company’s strategy to capitalize on interest rate spreads but elevates financial risk.
Cash and cash equivalents and short-term investments totaled approximately $1.49 billion, supporting liquidity needs amid debt maturities and dividend payments. The net debt to EBITDA ratio stands at a moderate 5.8x, reflecting a manageable debt burden relative to earnings before interest, taxes, depreciation, and amortization.
Balance Sheet Highlights Table#
| Item | 2024 | 2023 | 2022 |
|---|---|---|---|
| Total Assets | $103.56B | $93.23B | $81.85B |
| Total Liabilities | $90.86B | $81.88B | $70.48B |
| Long-Term Debt | $20.7B | $12.7B | $8.8B |
| Cash & Short-Term Investments | $1.49B | $1.41B | $1.58B |
| Stockholders' Equity | $12.61B | $11.26B | $11.27B |
Dividend Sustainability and Cash Flow Analysis#
Annaly’s free cash flow for 2024 reached $2.45 billion, a +24.22% growth compared to the previous year. Operating activities generated $3.31 billion in net cash, supporting dividend distributions totaling $1.49 billion. Despite this positive cash flow, the payout ratio exceeding 200% indicates dividends are not fully covered by net income, suggesting reliance on retained earnings or debt financing.
The company’s capital expenditures and investments in property, plant, and equipment saw a significant jump to -$863 million, reflecting ongoing portfolio management and potential acquisitions or upgrades. Financing activities yielded a net inflow of $11.75 billion, indicating active debt issuance or equity raises to fund operations and distributions.
Market and Competitive Landscape Context#
Annaly operates in the mortgage REIT sector, which is sensitive to interest rate fluctuations and credit market conditions. The company's recent financials reflect broader market volatility impacting mortgage-backed securities valuations. Compared to peers, Annaly’s high dividend yield is attractive but carries elevated risk given payout levels.
The mortgage REIT sector has seen increased competition and regulatory scrutiny, with firms diversifying strategies to mitigate interest rate risk. Annaly’s leverage increase and asset growth suggest a bet on interest rate spreads but warrant close attention from investors regarding risk management.
Analyst Estimates and Forward-Looking Financials#
Analyst projections indicate a steady revenue growth trajectory, with estimated revenues rising from $1.49 billion in 2024 to $2.41 billion by 2027. EPS estimates also show growth from approximately $2.65 in 2024 to near $2.93 in 2027, signaling expectations of operational stabilization and improved profitability.
Forward P/E ratios range from 8.07x in 2023 to about 7.74x in 2026, suggesting the market anticipates moderate earnings growth with relatively stable valuation multiples.
What This Means For Investors#
Investors should note that while Annaly Capital Management offers a compelling dividend yield of 13.74%, the payout ratio exceeding 200% signals caution. The company's improved net income and positive cash flow trends are encouraging, but the elevated leverage and operating losses highlight ongoing risks linked to interest rate environments and mortgage portfolio valuations.
The balance sheet expansion and increased debt levels underscore a strategic focus on leveraging market conditions for yield enhancement. However, this approach requires vigilant risk management and market monitoring.
Key Takeaways#
- Annaly’s net income turnaround from a loss in 2023 to a $1 billion profit in 2024 marks a significant recovery.
- The dividend yield of 13.74% remains a strong attraction but is accompanied by a high payout ratio, raising sustainability concerns.
- Balance sheet growth and increased leverage indicate strategic positioning to capitalize on interest rate spreads but increase financial risk.
- Positive free cash flow and operating cash flow growth support dividend payments, though financing activities suggest reliance on external funding.
- Forward-looking analyst estimates project steady revenue and EPS growth, with valuation multiples remaining moderate.
Investors should weigh Annaly’s high income potential against the risks embedded in its capital structure and market exposure. Continuous monitoring of earnings, cash flow, and interest rate developments will be critical in assessing the company’s ongoing financial health and dividend sustainability.