Financial snapshot: 2026-06-30. Research reviewed 2026-09-24. The annual earnings comparison is from 2026-10-03. The business and balance-sheet figures below relate to the reporting period shown.
The income-producing business
Annaly generates recurring income mainly from the spread between returns on mortgage investments and the cost of the repurchase agreements and other financing used to fund them. Hedging is central to the model: interest-rate swaps, swaptions, and other instruments can reduce exposure to changing rates, but they also carry costs and may not offset every move in mortgage spreads or funding markets. Portfolio composition, leverage, prepayments, credit performance, and asset purchases and sales all influence the cash-generating capacity available for distributions.
This is the business behind the dividend. We care most about the recurring earnings left for shareholders after the costs of running and financing it.
Annaly Capital Management, Inc.: 10-Q supporting reported earnings
The funding behind the assets
At 2026-06-30, Annaly Capital Management, Inc. reported $143.741 billion of total assets and $126.763 billion of total liabilities.
Liabilities represented 88.2% of reported assets. This broad balance-sheet measure includes more than borrowing and must not be read as a debt-to-equity ratio. Funding costs and asset losses can both reduce the earnings available to shareholders.
Annaly Capital Management, Inc.: financial statements and portfolio disclosures
Do earnings cover the dividend?
Annual earnings of $3.05 per share compare with $3.00 in annual dividends. Coverage is 101.67%. Earnings cover the payment in this update. Keep watching whether that support holds up.
We like the earnings support here. A steady or growing cushion would make the income case more comfortable.
Fly High update 2026-10-03
Interest-rate and mortgage-spread volatility
Mortgage-backed securities can decline in value when mortgage spreads widen, even if broader interest rates fall. Rate changes also affect asset yields, hedge results, prepayment behavior, and financing costs.
This exposure matters if it reduces the earnings left to pay the dividend. The next report will show whether that is happening.
Annaly Capital Management, Inc.: 10-Q supporting reported earnings
Leverage and funding dependence
Annaly uses financing to increase returns on mortgage assets. This magnifies both income opportunities and losses, while reliance on repurchase-agreement funding can create pressure when financing costs rise or market liquidity tightens.
This exposure matters if it reduces the earnings left to pay the dividend. The next report will show whether that is happening.
Annaly Capital Management, Inc.: 10-Q supporting reported earnings
An announced future preferred-stock cash payment
On August 19, 2026, Annaly announced that it would redeem all 17.7 million Series I preferred shares for $25 each on October 1, 2026, totaling $442.5 million. The redemption remained scheduled, rather than completed, as of September 24.
Fly High assessment: Include the scheduled cash use in the next funding review. A future redemption announcement must not be treated as completed deleveraging or as proof that the cash was already paid.
Annaly: announced October 1, 2026 Series I preferred redemption
Stable non-accrual share but more loans in foreclosure
At June 30, 2026, Annaly reported $527.6 million fair value of loans at least 90 days past due and on non-accrual, versus $446.0 million at year-end. Both were approximately 1% of their respective total loan portfolios. Loans in formal foreclosure increased from $198.3 million to $344.7 million. These figures include loans transferred or pledged to securitization vehicles.
Fly High assessment: The non-accrual percentage stayed broadly stable as the loan portfolio grew, but the higher foreclosure balance warrants specific recovery monitoring. Agency securities and the separate mortgage-credit assets have different protections; neither a stable percentage nor an Agency guarantee elsewhere in the portfolio establishes recovery of these loans.
Annaly Capital Management, Inc.: financial statements and portfolio disclosures
Unencumbered assets and an announced preferred redemption
At June 30, 2026, Annaly reported $8.042 billion of unencumbered financial assets, including $365.533 million cash and $5.159 billion of Agency mortgage securities. Economic leverage was 5.6 times, unchanged from year-end. An August announcement scheduled a $442.5 million Series I preferred redemption for October 1, which remained a future cash use on this review date.
Fly High assessment: The reported available assets and stable economic leverage support the funding check while the scheduled redemption remains to be completed. Most unencumbered resources are investments, not cash, and June holdings must not be presented as a confirmed September balance. Verify settlement and the next reported liquidity position.
Annaly Capital Management, Inc.: financial statements and portfolio disclosures
Book value remained broadly stable
Common book value was $20.15 per share at June 30, 2026. Applying the same common-equity calculation to December 31, 2025 gives approximately $20.21: parent stockholders equity less the reported preferred carrying amount, divided by common shares outstanding. First-half earnings available for distribution, a non-GAAP measure, were $1.55 per common share versus $1.45 of common distributions declared.
Fly High assessment: Capital per common share was broadly stable through the first half, and the disclosed recurring earnings measure exceeded distributions for that period. Total asset growth and securitized loan balances do not by themselves establish per-share growth. Keep this supporting check separate from the original Fly High matching-earnings comparison.
Annaly Capital Management, Inc.: financial statements and portfolio disclosures
What would change the earnings picture?
Compare the next dividend-support earnings result with the payment. Mortgage spreads, loans in foreclosure and book value will help us judge whether the current income level is holding.
