NLY-PF

Annaly Capital Management is the largest mortgage REIT in America, and its preferred stocks offer some of the highest yields in the preferred stock universe. Annaly invests primarily in agency mortgage-backed securities — bonds guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae — and uses leverage to amplify the yield on these relatively safe instruments.

The high yield on NLY-PF reflects the inherent volatility of mortgage REITs, which are highly sensitive to interest rate movements and the shape of the yield curve. When rates spike unexpectedly (as they did in 2022-2023), mortgage REIT book values can decline significantly. However, the preferred dividend is fixed and sits ahead of common dividends in the payment waterfall.

For income-focused investors willing to accept the volatility associated with mortgage REIT preferred stocks, NLY-PF offers a compelling yield from a company with decades of operating history and the scale to navigate interest rate cycles.