Does Annaly Capital's 12.9% Dividend Yield Look Sustainable?

One of the most closely watched aspects of Annaly Capital Management. Inc.’s NLY financial profile is its dividend policy. As a publicly traded mortgage real estate investment trust (mREIT), the company has historically delivered attractive shareholder returns while maintaining a high dividend yield that continues to attract income-focused investors.

Income-oriented investors generally favor REIT stocks because U.S. law requires these companies to distribute at least 90% of their annual taxable income as dividends. Against this backdrop, Annaly Capital’s dividend yield currently stands at 12.99%, making the stock appealing for investors seeking steady income streams. Further, its payout ratio of 95% highlights the company’s commitment to consistent shareholder distributions. In March 2025, Annaly Capital increased its quarterly cash dividend by 7.7% to 70 cents per share, reflecting management’s confidence in the company’s earnings capacity and long-term capital return strategy.

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Apart from dividends, Annaly Capital also has a share repurchase plan in place. On Jan. 31, 2025, the company’s board of directors authorized a new common share repurchase program that allows repurchases of up to $1.5 billion of outstanding common stock through Dec. 31, 2029. However, the company has not repurchased shares under the program since its announcement.

Annaly Capital also enjoys a decent liquidity position. As of March 31, 2026, the company had $9 billion of total assets available for financing, including cash and unencumbered Agency mortgage-backed securities (MBS) of $5 billion. These assets can readily provide liquidity during periods of adverse market conditions or economic stress.

Given its strong liquidity profile, disciplined capital management initiatives and sizable allocation toward highly liquid Agency MBS, Annaly Capital appears well-positioned to sustain its dividend payments in the near term.

How NLY Compares With AGNC & STWD on Dividend Strength

NLY operates alongside peers such as AGNC Investment Corp. AGNC and Starwood Property Trust, Inc. STWD, which also prioritize shareholder returns through consistent dividend payouts.

AGNC Investment offers a dividend yield of 14.05% and maintains a payout ratio of 96%. It holds a solid liquidity position, with $7 billion in cash and unencumbered Agency mortgage-backed securities as of March 31, 2026. It also maintains flexible access to diverse funding sources and opportunistic financing, supporting portfolio adjustments.

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Additionally, AGNC Investment has an active share repurchase program authorized for up to $1 billion through Dec. 31, 2026, with full authorization remaining available. The company plans to execute buybacks when its stock trades below tangible net book value, offering a potential buffer to shareholder value during volatility.

On the other hand, Starwood Property offers a dividend yield of 11.20% with a payout ratio of 127%. While the company has announced a $400 million share repurchase authorization in February 2026, its liquidity position remains relatively weak.

As of March 31, 2026, Starwood Property held $666.1 million in cash, cash equivalents and restricted cash against total debt of $23.1 billion. This narrow liquidity buffer raises concerns around financial flexibility and increases sensitivity to refinancing risk if macroeconomic conditions deteriorate.

Annaly Capital’s Price Performance & Zacks Rank

Over the past six months, NLY shares have gained 15.1% compared with the industry’s growth of 3.7%.

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The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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AGNC Investment Corp. (AGNC) : Free Stock Analysis Report

STARWOOD PROPERTY TRUST, INC. (STWD) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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