Annaly Capital: 3 Key Takeaways for Long-Term Investors

On its third-quarter 2026 earnings call, held on Oct. 21, 2026, Annaly Capital (NYSE:NLY) reported earnings available for distribution, an adjusted measure of core operational profit, of $0.80 per share to cover its quarterly dividend. It was a rough quarter, as GAAP net loss was $1.36 per average common share, and economic return was negative 7.6% while book value per share fell 11.4% to $17.86. The report indicated that higher coupon income and disciplined hedging can maintain dividend durability, even in volatile rate environments.

Three key takeaways from management explain how the business is navigating these market conditions.

1. Onslow Bay Achieves Record Quarterly Residential Funding Volume

Annaly Capital relies on its Onslow Bay correspondent channel, a platform that purchases residential mortgage loans directly from originators, to generate higher-yielding credit assets. Expanding the funding volume enables the business to create proprietary residential credit portfolios with tight underwriting standards.

Our Onslow Bay correspondent channel delivered another strong quarter, with $7 billion of lock volume and $5.8 billion of fundings, our highest quarterly funding volume since the channel's inception more than 5 years ago.
-- David Finkelstein, Chief Executive Officer and Co-Chief Investment Officer

2. Bulk Servicing Acquisitions Solidify Capital Position

Mortgage servicing rights, or contracts that grant the right to service loans for a fee, generate steady cash flows that cushion bond market swings. Scale in bulk purchases helps Annaly Capital earn higher float income from borrower escrow accounts when interest rates rise.

Year to date, we remain the largest purchaser of bulk MSR, reflecting the value we bring to the origination community as a strategic partner with a deep permanent capital base.
-- David Finkelstein, Chief Executive Officer and Co-Chief Investment Officer

3. Specified Pools Shield Agency Portfolios From Volatility

Agency mortgage-backed securities, or government-backed residential mortgage bonds, form the majority of the portfolio. Investing in specified pools, which are targeted mortgage packages with lower loan balances or seasoned loans, protects asset value against unexpected loan prepayment or extension risks.

On average, our pools are more than three and a half years seasoned and carry loan balances less than half those of new production, providing both call and extension protection.
-- David Finkelstein, Chief Executive Officer and Co-Chief Investment Officer

Looking Ahead

Interest rate volatility is subsiding, allowing high yields to support returns.

We entered the fourth quarter prudently positioned with substantial liquidity, and we remain focused on preserving capital while dynamically allocating across our three businesses as opportunities emerge.
-- David Finkelstein, Chief Executive Officer and Co-Chief Investment Officer

Diversified platforms in servicing, residential credit, and agency bonds provide capital flexibility without fixed origination costs. Proprietary asset creation and relatively disciplined leverage underpin long-term value.

We believe the combination of diversified earnings, proprietary asset creation, conservative leverage, and capital allocation flexibility positions Annaly well to continue delivering attractive risk-adjusted returns.
-- David Finkelstein, Chief Executive Officer and Co-Chief Investment Officer

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.