Annaly Capital’s floating-rate preferred share NLY-G currently yields approximately 8.0%, making it one of the most attractive high-income options in the mortgage REIT sector. With a risk rating of 1—the lowest in its peer group—NLY-G combines a relatively narrow credit spread of 4.17% with the stability of agency mortgage-backed securities in Annaly’s portfolio. Investors benefit from a dividend structure that resets with short-term rates, while Annaly locks in long-term financing without the repayment risk associated with repo or bond rollovers.

In a rising rate environment (e.g., short-term rates climbing to 7%), NLY-G’s dividend rate would increase sharply, yet Annaly is unlikely to call the issue due to the absence of cheaper refinancing alternatives. Conversely, if rates fall toward zero, NLY-G’s dividend could drop below 5%, potentially prompting share price declines as investors seek broader credit spreads. Under moderate rate movements, NLY-G’s market price should primarily track dividend accrual, with a possible 2–3% premium if buyers aggressively bid for the issue.

For the quarter ending December 2025, Annaly reported net earnings of $0.74 per common share, exceeding consensus estimates by 3.25% and marking a year-over-year improvement from $0.72. Although total revenue of $366.6 million fell short of expectations by 21.8%, it nearly doubled the prior-year figure of $187.3 million. The company has now delivered earnings surprises in each of its last four quarters, underscoring its ability to generate reliable income in a volatile rate environment.

On January 29, 2026, Wells Fargo reiterated its Overweight rating on Annaly Capital and raised its 12-month target from 23 to 25, citing the firm’s strong agency MBS portfolio and stable capital structure. The upgrade reflects confidence in Annaly’s ability to sustain dividend coverage and leverage its cost-efficient financing, particularly through preferred equity, even if volatility in benchmark rates persists.