Key Highlights

  • Annaly (NLY) pays $0.75 a quarter, a Yield of about 14.56%; the next ex-dividend date is Sept. 30.
  • NLY fell 2.1% while AGNC and Rithm rose 0.8%; turnover of $236.07 million beat the typical $159.46 million.
  • The 14-day RSI is 25.2, in oversold territory, and the stock trades below all three key moving averages.

Annaly Capital Management (NYSE:NLY) fell 2.1% while Mortgage REIT peers rose a median 0.8%, lifting its Dividend yield to about 14.6% on a $0.75 quarterly payout. The largest mortgage REIT raised its dividend this year and trades near book value, but heavy Volume and an RSI of 25.2 show investors are nervous as Treasury yields hit their highest level since 2007.

Annaly's Dividend Yield sits at about 14.6 percent, among the highest of the major mortgage REITs. Annaly, the largest U.S. mortgage REIT, invests mainly in government-backed mortgage securities, residential loans and mortgage servicing rights. It raised its quarterly dividend to $0.75 from $0.70 in Q2 and held it at $0.75 for Q3, a sign of confidence while several rivals have cut.

Book value was about $20.15 per share, so the stock trades at roughly 1.0x book, a premium to many peers that reflects Annaly's scale and diversification. The challenge is the rate backdrop: the 10-year Treasury Yield hit its highest level since 2007 and the Yield Curve has flattened, which squeezes the spread mortgage REITs earn.

Annaly (NLY) Lags Mortgage REIT Peers

The pre-market indication rose 0.7% to $20.75, but NLY ended the session between $20.55 and $21.07, near the low. The $0.44 move equaled about 1.1x the 14-day average true range of $0.40. Starwood fell 2.4%. NLY is down 10.0% year-to-date and 11.4% over the past month, and its 52-week range is $20.00 to $24.52.

NLY Technical Levels: Oversold Near the 52-Week Low

NLY trades below its 20-day Moving Average of $22.02, its 50-day of $22.60 and its 200-day of $22.50.

The 14-day RSI is 25.2. RSI measures buying versus selling pressure on a 0 to 100 scale, and readings under 30 are oversold. Income buyers often step in at these levels ahead of an ex-dividend date.

MACD is -0.52, below its -0.39 signal line. MACD tracks momentum, and a reading below the signal line confirms selling pressure.

ADX is 35.4. ADX measures trend strength, and a reading above 25 shows the decline is strong and established.

First resistance is $21.63, then $22.28. The 52-week low of $20.00 is the key support.

Fundamentals and Analyst View

Trailing-twelve-month Revenue is $7.73 billion, up 19.4%. NLY trades at a trailing P/E of 5.2, price-to-sales of 2.0 and price-to-book of 1.0, with debt-to-equity of 7.38, typical for a leveraged mortgage REIT. The market Capitalization is about $15.5 billion to $16.1 billion. Analysts rate NLY a Buy with an average target near $24.23, about 18% above the current price.

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