NLY

Annaly is a leveraged agency mortgage REIT, and FY2025 was a good year: net income doubled to $2.03B (+102.3%) and diluted EPS rose to $2.92 (+80.2%), producing a 12.6% return on equity. At $22.21 the stock trades at just 7.6x earnings, the kind of low headline multiple typical of mREITs, which exist primarily to pass through net interest spread as dividends. Dividends paid grew 31.6% to $495M and equity expanded 27.6% to $16.1B, the latter driven largely by capital raising — shares outstanding rose 24.2% to 718M, a dilution that funded balance-sheet growth (total assets +31.0% to $136B).

The structural caveats are inherent to the model and well-documented in the filing. Leverage is high at 7.42x liabilities/equity, and management is explicit that valuations 'are most sensitive to changes in interest rate, which also impacts prepayment speeds,' noting that 'an increase in CPR would decrease the carrying value and yield of our Agency mortgage-backed securities.' Annaly funds long-duration MBS with repurchase agreements priced daily by counterparties, so book value and earnings can move sharply with rate volatility and MBS-spread widening — exactly the dynamic that produced a -$1.64B net loss as recently as FY2023. Operating cash flow fell 79.1% to $693M, a reminder that GAAP/cash metrics for this business are noisy relative to economic returns.