Annaly Capital Management, Inc. Reports Strong Second Quarter 2026 Results: Dividend Raised Amid Robust Earnings

Key Financial Highlights for Q2 2026

• GAAP net income: \$1.06 per average common share, a significant increase from prior quarters.
• Earnings Available for Distribution (EAD): \$0.79 per average common share, exceeding the dividend for the ninth consecutive quarter.
• Economic Return: 5.5% for Q2, contributing to a 6.9% economic return for the first half of 2026.
• Book Value: \$20.15 per common share, up from \$19.82 in Q1 2026 and \$18.45 in Q2 2025.
• Dividend Increase: Common stock cash dividend raised to \$0.75 per share, up from \$0.70 in previous quarters.
• GAAP Leverage: 7.4x, up from 7.3x the previous quarter; Economic Leverage: 5.6x, down from 5.7x.
• Annualized GAAP Return on Average Equity: 19.88% (up from 7.15% in Q1 2026).
• Net Interest Margin: 1.47%, up from 1.41% in Q1 2026.
• Dividend Yield: 13.42%, based on closing price of \$22.36.

Portfolio & Strategic Business Moves

• Total Portfolio: \$109.4 billion, including \$95.0 billion in highly liquid Agency portfolio.
• Agency Portfolio Growth: Increased by nearly \$3 billion, now representing 57% of dedicated capital. Investments focused on higher coupon TBA securities and specified pools.
• Hedge Positioning: Conservative approach maintained amid elevated macro uncertainty; ended the quarter with a hedge ratio of 97%, focusing on increased swap exposure.
• Residential Credit Portfolio: Unchanged at \$10.4 billion, representing 22% of dedicated capital, with continued activity in whole loan correspondent channel and securitization platform.
• Mortgage Servicing Rights (MSR) Portfolio: Relatively unchanged at \$4.1 billion, representing 21% of dedicated capital. Onslow Bay remains the fifth largest non-bank servicer of Agency MBS.
• Financing Capacity: \$9.6 billion of total assets available for financing, including \$5.5 billion in cash and unencumbered Agency MBS.
• Securitization Activity: Record thirteen securitizations by Annaly Residential Credit Group totaling \$6.8 billion in the quarter.
• Issuer Rankings: Remains the largest non-bank issuer and second overall issuer of Prime Jumbo and Expanded Credit MBS.
• Capital Raising: \$447 million raised through at-the-market sales program.

Financial Performance Trends

Management Commentary

David Finkelstein, CEO & Co-Chief Investment Officer:
“Annaly delivered another quarter of solid results, demonstrating the strength and breadth of our diversified housing finance platform, including a 5.5% economic return and EAD that exceeded the dividend for the ninth consecutive quarter. These results contributed to a 6.9% economic return through the first half of 2026 and supported our decision to increase the quarterly common stock dividend to \$0.75 per share, reflecting the durable earnings power of our portfolio. Looking ahead, we see meaningful opportunities across all three of our investment strategies and believe our scale, liquidity and disciplined capital allocation position us to continue delivering compelling risk-adjusted returns across market cycles.”

Balance Sheet & Capital Structure

• Total Assets: \$143.7 billion (as of June 30, 2026).
• Total Equity: \$16.98 billion.
• Preferred Stock: \$1.80 billion outstanding, across Series F, G, I, and J.
• Common Stock: 750.6 million shares issued and outstanding.
• Repurchase Agreements: \$86.9 billion.
• Debt Issued by Securitization Vehicles: \$34.4 billion.
• Participations Issued: \$2.55 billion.

Detailed Income Statement (Q2 2026)

• Interest Income: \$1.81 billion.
• Interest Expense: \$1.32 billion.
• Net Interest Income: \$488 million.
• Net Servicing Income: \$157 million.
• Net Gains (Losses) on Investments: (\$319 million) — substantial negative swing compared to prior quarters.
• Net Gains (Losses) on Derivatives: \$552 million — strong positive offset to investment losses.
• Total Other Income: \$247 million.
• General and Administrative Expenses: \$58 million.
• Net Income Before Taxes: \$835 million.
• Net Income: \$828 million; \$823 million attributable to Annaly after noncontrolling interests and preferred dividends.

Shareholder-Relevant Issues and Price-Sensitive Information

• Dividend Increase: Raising the dividend to \$0.75 per share is a direct positive for shareholders and may impact share price, signaling management confidence in earnings strength and portfolio durability.
• Record Securitization Activity: Thirteen securitizations totaling \$6.8 billion reflect robust activity and may indicate increased profitability and market presence.
• Economic Returns Outpacing Dividend: EAD continues to exceed the dividend, suggesting sustainability and possible future increases.
• Solid Book Value Growth: Rising book value per share often supports share price appreciation and signals strong asset performance.
• Leverage and Hedge Ratios: Conservative hedge positioning (97% ratio) amid elevated macro uncertainty signals prudent risk management, which is positive for shareholders concerned about volatility.
• Capital Raising: \$447 million raised via at-the-market program — could dilute share value but is offset by accretive investment and portfolio expansion.
• High Dividend Yield: The annualized dividend yield of 13.42% is highly attractive and may draw investor interest.
• Issuer and Servicer Rankings: Maintains leadership in Prime Jumbo and Expanded Credit MBS, and as the fifth largest non-bank servicer of Agency MBS, underscoring competitive positioning.
• Interest Rate Environment: Average GAAP cost of liabilities declined slightly, while economic cost increased, reflecting active management of funding costs.

Outlook & Conference Call

Annaly will hold its Q2 earnings conference call on July 22, 2026, at 9:00 a.m. ET. The call will cover results and outlook, providing an opportunity for investors to hear directly from management.

Non-GAAP Measures & Reconciliations

• Annaly provides detailed reconciliations and explanations for non-GAAP metrics such as EAD, economic leverage, and net interest margin (excluding premium amortization adjustment).
• These metrics are used to provide greater transparency into operating performance and are widely followed by analysts and investors.

Risks & Forward-Looking Statements

The report contains forward-looking statements subject to risks and uncertainties. Actual results may differ materially from projections due to market conditions, interest rate changes, and other factors.

Conclusion

Annaly Capital Management, Inc. delivered robust Q2 2026 results, highlighted by strong earnings, a dividend hike, and continued leadership in securitizations and servicing. The combination of rising book value, conservative risk management, and high dividend yield is likely to be viewed favorably by shareholders and may positively impact share price. Investors should monitor future guidance, conference call commentary, and any shifts in macroeconomic conditions that could affect Annaly’s portfolio and earnings.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should review official filings and consult financial professionals before making investment decisions. Forward-looking statements are subject to risks and uncertainties.

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