Annaly Capital’s Series G preferred shares (NLY.PR.G) currently offer a floating dividend tied to short-term rates with a quoted yield to call of 14.1%, the most attractive among mortgage REIT preferreds rated 1 by our risk model. The coupon resets quarterly based on three-month SOFR plus a 4.172% credit spread. Because its spread is relatively thin compared with peers, NLY.PR.G trades at a discount to par, translating into an effective yield materially above 8% for investors targeting high income without the volatility of common equity.

Under a stress-test scenario where short-term rates climb to 7%, the dividend rate on NLY.PR.G would double relative to current levels, yet Annaly is unlikely to call the issue due to the absence of cheaper long-term financing alternatives. Conversely, if rates fall toward zero, the dividend could compress below 5%, a level that historically underwhelms preferred-share investors and could trigger a modest repricing to restore yields. In a stable-rate environment, price appreciation beyond accrued dividends is capped at approximately 2–3%, reflecting the lack of compelling buyer demand above carry accrual.

Within the mREIT preferred space, Annaly’s Series G stands out with the lowest risk grade, backed by an all-agency mortgage-backed securities portfolio representing over 90% of assets. Its credit spread of 4.172% compares with 4.993% on the next closest sibling issue (Series F), marking a meaningful funding advantage. Only Dynex Capital and AGNC Investment trail Annaly in our risk rankings, reinforcing NLY preferred shares as the conservative tranche of choice when yield levels are attractive.

In the fourth quarter of 2025, Annaly delivered GAAP net income of $1.40 per share and economic return of 8.6%, up from 7.1% in the prior quarter, on a total portfolio of $104.7 billion. Common dividends of $0.70 were paid, while book value per share rose to $20.21. Agency MBS positions grew 6% sequentially to $92.9 billion, and residential credit assets climbed 16% to $8.0 billion. The company also expanded its MSR portfolio by 8% to $3.8 billion and raised $2.9 billion of accretive capital, including Series J preferred issuance, supporting a 20.2% economic return for the full year.