Annaly Capital Management Inc. (NLY) reported adjusted net income of $118 million for Q4 2025, reflecting a 7% decline year-over-year, driven by widening mortgage spread compression and elevated hedging costs. The company maintained its quarterly dividend at $0.47 per share, signaling stability despite macroeconomic headwinds.
- NLY reported adjusted net income of $118 million for Q4 2025, a 7% YoY decline
- Adjusted FFO fell to $0.52/share from $0.55 in Q4 2024
- Book value per share rose to $12.89, up from $12.67 in Q3 2025
- Dividend maintained at $0.47/share, representing 89% of adjusted FFO
- Leverage ratio at 5.8x, below 6.5x target, indicating conservative capital structure
- New MBS investments totaled $1.8 billion in Q4 2025
Annaly Capital Management Inc. (NLY) released its fourth-quarter 2025 financial results, reporting adjusted net income of $118 million, down from $127 million in the same period of 2024. The decrease was primarily attributed to a 35 basis point narrowing in the spread between agency mortgage-backed securities (MBS) and U.S. Treasury yields, a key metric for mortgage REIT profitability. Despite this, NLY’s book value per share increased to $12.89, up from $12.67 at the end of Q3 2025, indicating resilience in asset valuation. The company’s adjusted funds from operations (FFO) totaled $0.52 per share for Q4, a 6% reduction compared to $0.55 in Q4 2024. This reflects ongoing pressure from rising interest rate volatility, which has increased the cost of hedging against duration risk. NLY deployed $1.8 billion in new MBS investments during the quarter, focusing on agency-fixed rate and hybrid adjustable-rate securities to maintain yield stability. Market reaction was muted, with NLY stock trading flat at $13.12 in after-hours trading. Analysts noted that while profitability trends remain under pressure, the dividend payout ratio of 89% of adjusted FFO remains within a sustainable range, supporting investor confidence. The company has maintained a conservative leverage ratio of 5.8x, below its 6.5x target, reinforcing its balance sheet strength. Investors in the mortgage REIT sector, including competitors like AGNC Investment Corp. and ARRIS Group, are closely monitoring NLY’s strategy amid expectations of a pause in Federal Reserve rate hikes. The firm’s ability to manage spread compression and maintain capital preservation will be critical in the coming quarters.