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2024 Q1 results
- $.32 per share for 2024 Q1
- operating volumes increased > 11% yoy
- increasing NG pipeline capacity
- expect yoy EBITDA up 3%
- new debt issues rated BBB
- debt ratio stable at 62%
- dividend very safe now
- current dividend rate 8.25%
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- ARCC is the market leading BDC lender
- flexible asset strategy should continue to adapt well to changing market conditions
- eps continues to grow
- common dividend coverage is a goal
- common dividend increases only when core earnings increase
- dividend coverage averages 125%, rate about 8.2%, dividend growth averages 4% with low dividend risk
- AUM - Credit loans are 65% of assets, equity types most of the rest
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- Q1 eps = $.54 up from a loss in 2023
- dividend is 8.2% ( $1.00 dps ) with coverage now at 175% and dividend risk is moderate
- earnings vary highly with interest rates
- some mortgage loans and MBS with risk
NLY - Annaly Capital REIT
Annaly Capital Management, Inc., a diversified capital manager, engages in mortgage finance. The company invests in agency mortgage-backed securities collateralized by residential mortgages; non-agency residential whole loans and securitized products within the residential and commercial markets; mortgage servicing rights; agency commercial mortgage-backed securities; to-be-announced forward contracts; residential mortgage loans; and agency or private label credit risk transfer securities. It has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders.
- dividend > 13% typically BUT stock price declines historically as income drops, stock issued to cover
- payout ratio ( now 100% ) was often too high in the past leading to stock issues that cut eps, dropped stock price
- bulk of assets in MBS ( 85% ) with high variable default risk in commercial markets, many residential loans are agency backed
- hi debt leverage - Economic leverage* of 5.6x, down from 5.7x in the fourth quarter
- rate risk when financing long-term loans with short-term debt ( bad in rising rate environment )
- Financing costs increased modestly with average GAAP cost of interest-bearing liabilities of 5.40%, up 3 basis points quarter-over-quarter, and average economic cost of interest-bearing liabilities* of 3.78%, up 36 basis points quarter-over-quarter
- buys hedges on rate risk
- debt leverage used to pay for the hedges
- Hedge ratio decreased from 106% to 97% given maturity of short-term swaps; new hedges were placed further out the yield curve
- eps driven by volumes, shares outstanding, income from net interest margin ( earned vs paid ) and leverage
- NLY Strategic model
- Annaly’s Agency portfolio is made up of high quality and liquid securities, predominantly specified pools, TBAs and derivatives
- Portfolio benefits from in-house proprietary analytics that identify emerging prepayment trends and a focus on durable cash flows
- Diverse set of investment options within the Agency market, including Agency CMBS, provides complementary duration and return profiles to Agency MBS
- Access to deep and varied financing sources, including traditional bilateral repo and proprietary broker-dealer repo
Potential Challenges
Candidate Solutions
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