What happened
Annaly Capital Management (NLY +1.23%) stumbled out of the gates on Tuesday, dropping 2.3% shortly after the opening bell, but then charged higher as the day progressed. At the closing bell, it finished the day up 5.9% to $17.68 per share.
It was a good day for the markets as the Dow Jones Industrial Average was up 337 points (1.1%), the S&P 500 gained 62 points (1.6%), and the Nasdaq Composite jumped 247 points (2.3%). Small caps were the biggest gainers as the Russell 2000 finished the day up 48 points (2.8%).
So what
It has been a difficult year for mortgage real estate investment trusts (REIT), like Annaly Capital, given the state of the housing market.
However, Annaly likely got a boost from a decent earnings report from a fellow mortgage REIT, AGNC Investment (AGNC +0.94%). AGNC posted its third-quarter earnings on Monday after market close, and while it suffered a net loss, a key non-GAAP metric to measure income -- net spread and dollar roll income per share -- beat analysts' estimates.
NYSE: NLY
Key Data Points
AGNC posted an $0.84 net spread and dollar roll income per share, which was up from $0.83 last quarter and $0.75 in the third quarter of 2021. The consensus estimate among analysts was $0.60 per share. AGNC officials said it was due to the company's asset repositioning and significant hedge position.
Now what
Annaly Capital is very similar to AGNC Investment, as they are both mortgage REITs -- they invest in mortgages and mortgage-backed securities, and earn revenue on the interest payments. So, the better-than-expected earnings report for AGNC may have improved the investor sentiment toward Annaly Capital.
Annaly reports third-quarter earnings on Wednesday after market close, so it will be interesting to see where it stands in a very difficult market environment.
Like AGNC, Annaly is an excellent dividend stock, as REITs are required by law to pay out most of their earnings in dividends. The REIT did a 1-for-4 reverse stock split in September, so it is trading at about $17 per share and has a quarterly dividend of $0.88, with a 21.1% yield.
