Making money in the mortgage REIT space used to be about one thing: guessing where the Fed would land. But lately, the Annaly Capital stock price has started telling a much more nuanced story. It's not just a "yield play" anymore.
Honestly, the way people talk about Annaly (NYSE: NLY) is usually centered on that massive dividend. You've probably seen the double-digit yield and thought it was a typo. It isn't. But if you’re only looking at the payout, you’re missing why the stock price is currently hovering near $24.39, hitting levels we haven't seen in a while.
Things are changing. Rapidly.
The Annaly Capital stock price is finally catching a break
For the longest time, NLY was stuck in the mud. High interest rates were crushing the value of their mortgage-backed securities (MBS). It was ugly. But as of mid-January 2026, the momentum has shifted. The stock is up over 42% on a total return basis over the last twelve months. That’s a massive swing.
Why the sudden love?
Basically, the Federal Reserve stopped being the villain of this story. After the 25-basis-point cut in December 2025, bringing the federal funds rate to a range of 3.50% to 3.75%, the market started to breathe again. When rates stabilize or head lower, the "spread"—the difference between what Annaly earns on its mortgages and what it pays to borrow—tends to widen.
BTIG recently upgraded the stock to a "Buy" with a price target of $25.00. They aren't the only ones. Analysts at Piper Sandler and JP Morgan have been maintaining "Overweight" ratings because the environment for Agency MBS is the most constructive it’s been in years.
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What most people get wrong about the book value
If you listen to the bears, they’ll tell you that the Annaly Capital stock price is "expensive" because it trades at a premium to its book value. Currently, the price-to-book ratio is sitting around 1.24.
Is that high? Sorta.
Historically, mREITs like Annaly often trade closer to 1.0. But the premium today reflects something different: confidence. Investors are willing to pay more for the management's ability to navigate the "belly of the yield curve." Annaly has been aggressively shifting its portfolio, which now totals roughly $97.8 billion in assets.
They aren't just sitting on old, low-interest mortgages. They’ve been locking in newer, higher-coupon Agency MBS that provide a much better buffer.
The dividend trap or a gold mine?
Let's talk about the $0.70 quarterly dividend. It’s the elephant in the room.
The next payout is scheduled for January 30, 2026. At a 11.75% yield, it’s a siren song for income investors. But here is the reality check: the payout ratio has been tight. We're looking at a figure around 87% to 97%, depending on whose earnings estimates you trust.
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Zacks Consensus Estimates project 2026 earnings at $2.90 per share. If they keep the dividend at $2.80 annually, they have very little room for error. One bad quarter of interest rate volatility and that "safe" dividend could face another trim.
But there’s a silver lining.
Annaly has a $1.5 billion stock repurchase program running through 2029. They also have an $8.8 billion liquidity cushion. This isn't a company that's struggling for cash; it's a company that's being incredibly defensive while waiting for the Fed to make its next move.
The Powell Factor and May 2026
There is a huge date on the calendar that every NLY investor has circled: May 15, 2026.
That is when Jerome Powell’s term as Fed Chair expires. Markets hate uncertainty. If a new, more hawkish chair is nominated, the Annaly Capital stock price could take a hit as bond yields spike. If we get a "dovish" successor who wants to push rates toward 3%, NLY could easily clear that $25 price target and head higher.
How to play NLY in the current market
It’s easy to get blinded by the yield. Don't be that person.
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The Annaly Capital stock price is currently sensitive to two major things:
- MBS Prepayment Risk: If mortgage rates drop too fast, people refinance. Annaly loses those high-interest assets earlier than expected. This "premium amortization" can eat into earnings.
- The Yield Curve: A "normal" upward-sloping curve is Annaly’s best friend. An inverted curve is its worst enemy. Right now, we are seeing the curve normalize, which is why the stock is finally outperforming the S&P 500.
If you’re looking for a way to manage the risk, some investors are looking at the preferred shares (like NLY-PG). These haven't seen the same price appreciation as the common stock, but they offer a bit more stability if the broader market gets choppy.
Honestly, the real value in Annaly right now is its scale. With $5.9 billion in cash and unencumbered assets, they are the "big dog" in the space. When smaller mREITs struggle with margin calls or liquidity, Annaly usually finds a way to capitalize.
Actionable steps for your portfolio
Don't just jump in because the yield looks juicy. Start by checking the adjusted book value when they report earnings on January 28, 2026. If the stock price is trading more than 15% above that book value, it might be worth waiting for a pull-back.
- Watch the 10-year Treasury: If it stays range-bound between 4.0% and 4.25%, Annaly should remain stable.
- Monitor the Fed's January meeting: If they hint at a pause rather than more cuts, expect some short-term volatility in the NLY share price.
- Verify the payout: Ensure the "Earnings Release" shows at least $0.71 or $0.72 per share to safely cover that $0.70 dividend.
The mortgage market isn't as scary as it was in 2023, but it’s still no place for the faint of heart. Keep your position size reasonable and remember that in the world of mREITs, total return (price + dividends) is the only metric that actually matters.