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Annaly Vs Arbor Realty: Which mREIT Stock Has Better Prospects?
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Annaly Capital Management (NLY - Free Report) and Arbor Realty Trust, Inc. (ABR - Free Report) present compelling opportunities for income-focused investors, yet they differ significantly in risk profiles, dividend sustainability and growth trajectory.
Let us delve deeper and analyze various factors at play to decide which is a smarter investment option.
The Case for Annaly
NLY is focused on improving its liquidity and reducing leverage to support capital distribution activities. Till the end of the first quarter of 2025, the company had $7.5 billion of total assets available for financing, including cash and unencumbered Agency mortgage-backed securities (MBS) of $4.7 billion, which can readily provide liquidity in times of adverse market conditions.
Annaly has a record of paying monthly dividends, currently yielding a staggering 14.9%. It currently sits at a payout ratio of 101%. In March, the company announced a cash dividend of 70 cents per share, marking a 7.7% hike from the prior payout. This move reflects confidence in its cash flow and growth prospects.
NLY's investment strategy is driven by the prudent selection of assets and effective capital allocation to achieve stable returns. The strategy includes traditional Agency MBSs, which provide downside protection and investments in more non-agency and credit-focused asset classes that enhance returns. Also, a scaled mortgage servicing rights (MSR) platform will continue to benefit from a low prepayment environment.
The company is focusing on improving its capabilities by acquiring newly originated MSRs from its partner network, which will continue to provide a strong advantage in expanding its MSR business. As of March 31, 2025, Annaly’s investment portfolio aggregated $84.9 billion.
As the mortgage rates come down from historical highs, purchase originations and refinancing activities will likely improve. Hence, NLY will likely witness book value improvement in the coming period as spreads in the Agency market tighten, driving asset prices. This should also boost net interest spread, improving the portfolio's overall yield. This is expected to support the company’s financials in the upcoming period.
The Case for Arbor Realty
ABR primarily focuses on originating and servicing loans for multi-family, single-family and other commercial real estate assets. Housing affordability challenges are expected to decline as mortgage rates decline gradually. With this, mortgage originations are expected to witness improvement. This will lower operational and financial challenges for Arbor Realty, and increase the gain on sale margin and new investment activity.
Like NLY, Arbor Realty has a record of paying out quarterly dividends. ABR’s current dividend yield is 12.66%, with a payout ratio of 115%. However, earlier this month, the company reduced its dividend by 30.3% to 30 cents per share.
ABR’s weak liquidity position is concerning. As of March 31, 2025, the company had cash and cash equivalents of $508 million, while it had a long-term debt of $4.8 billion. Hence, given a weak liquidity profile, its capital distribution seems unsustainable.
Arbor Realty has significant exposure to multi-family loans, some of which are underperforming. In the first quarter of 2025, the company foreclosed on seven non-performing loans totaling $196.7 million.
NLY & ABR: Price Performance & Valuation Analysis
So far this year, NLY shares have risen 6.2%, while ABR has lost 27.1% compared with the industry’s decline of 2%.
Price Performance
Image Source: Zacks Investment Research
In terms of valuation, Annaly is currently trading at a 12-month forward price-to-earnings (P/E) of 6.50X, lower than its five-year median of 7.29X. Arbor Realty, conversely, is currently trading at a 12-month forward P/E of 7.69X, which is lower than its five-year median of 8.70X.
Price-to-Earnings F12M
Image Source: Zacks Investment Research
Both stocks are trading at a discount compared with the industry average of 7.78X. As such, NLY is inexpensive compared with ABR.
How Do Estimates Compare for Annaly & Arbor Realty?
The Zacks Consensus Estimate for NLY’s 2025 and 2026 sales implies year-over-year rallies of 492.8% and 13.2%, respectively. Likewise, the consensus estimate for 2025 and 2026 earnings indicates 6.3% and 1.4% rise, respectively. Its EPS estimates for 2025 and 2026 have moved upward over the past 30 days.
NLY Estimate Revision Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ABR’s 2025 sales suggests a year-over-year decline of 17.9%, while for 2026, it indicates an increase of 2.5%. Likewise, the consensus estimate for 2025 earnings implies a fall of 32.2%, while for 2026, it calls for a rise of 12.3%. The company’s EPS estimates for 2025 and 2026 have moved downward over the past 30 days.
ABR Estimate Revision Trend
Image Source: Zacks Investment Research
NLY or ABR: Which Stock to Bet On?
In the battle between Annaly and Arbor Realty, NLY clearly emerges to be a better pick. Its robust liquidity, more sustainable dividend (even with a high yield), improving financial outlook and attractive valuation make it a smarter choice for income-focused investors.
In contrast, ABR faces mounting credit risks, a recent dividend cut and a weaker liquidity position, making it a riskier bet with less upside potential.
Annaly currently carries a Zacks Rank #3 (Hold), while Arbor Realty has a Zacks Rank of 4 (Sell).
Image: Bigstock
Annaly Vs Arbor Realty: Which mREIT Stock Has Better Prospects?
Annaly Capital Management (NLY - Free Report) and Arbor Realty Trust, Inc. (ABR - Free Report) present compelling opportunities for income-focused investors, yet they differ significantly in risk profiles, dividend sustainability and growth trajectory.
Let us delve deeper and analyze various factors at play to decide which is a smarter investment option.
The Case for Annaly
NLY is focused on improving its liquidity and reducing leverage to support capital distribution activities. Till the end of the first quarter of 2025, the company had $7.5 billion of total assets available for financing, including cash and unencumbered Agency mortgage-backed securities (MBS) of $4.7 billion, which can readily provide liquidity in times of adverse market conditions.
Annaly has a record of paying monthly dividends, currently yielding a staggering 14.9%. It currently sits at a payout ratio of 101%. In March, the company announced a cash dividend of 70 cents per share, marking a 7.7% hike from the prior payout. This move reflects confidence in its cash flow and growth prospects.
NLY's investment strategy is driven by the prudent selection of assets and effective capital allocation to achieve stable returns. The strategy includes traditional Agency MBSs, which provide downside protection and investments in more non-agency and credit-focused asset classes that enhance returns. Also, a scaled mortgage servicing rights (MSR) platform will continue to benefit from a low prepayment environment.
The company is focusing on improving its capabilities by acquiring newly originated MSRs from its partner network, which will continue to provide a strong advantage in expanding its MSR business. As of March 31, 2025, Annaly’s investment portfolio aggregated $84.9 billion.
As the mortgage rates come down from historical highs, purchase originations and refinancing activities will likely improve. Hence, NLY will likely witness book value improvement in the coming period as spreads in the Agency market tighten, driving asset prices. This should also boost net interest spread, improving the portfolio's overall yield. This is expected to support the company’s financials in the upcoming period.
The Case for Arbor Realty
ABR primarily focuses on originating and servicing loans for multi-family, single-family and other commercial real estate assets. Housing affordability challenges are expected to decline as mortgage rates decline gradually. With this, mortgage originations are expected to witness improvement. This will lower operational and financial challenges for Arbor Realty, and increase the gain on sale margin and new investment activity.
Like NLY, Arbor Realty has a record of paying out quarterly dividends. ABR’s current dividend yield is 12.66%, with a payout ratio of 115%. However, earlier this month, the company reduced its dividend by 30.3% to 30 cents per share.
ABR’s weak liquidity position is concerning. As of March 31, 2025, the company had cash and cash equivalents of $508 million, while it had a long-term debt of $4.8 billion. Hence, given a weak liquidity profile, its capital distribution seems unsustainable.
Arbor Realty has significant exposure to multi-family loans, some of which are underperforming. In the first quarter of 2025, the company foreclosed on seven non-performing loans totaling $196.7 million.
NLY & ABR: Price Performance & Valuation Analysis
So far this year, NLY shares have risen 6.2%, while ABR has lost 27.1% compared with the industry’s decline of 2%.
Price Performance
Image Source: Zacks Investment Research
In terms of valuation, Annaly is currently trading at a 12-month forward price-to-earnings (P/E) of 6.50X, lower than its five-year median of 7.29X. Arbor Realty, conversely, is currently trading at a 12-month forward P/E of 7.69X, which is lower than its five-year median of 8.70X.
Price-to-Earnings F12M
Image Source: Zacks Investment Research
Both stocks are trading at a discount compared with the industry average of 7.78X. As such, NLY is inexpensive compared with ABR.
How Do Estimates Compare for Annaly & Arbor Realty?
The Zacks Consensus Estimate for NLY’s 2025 and 2026 sales implies year-over-year rallies of 492.8% and 13.2%, respectively. Likewise, the consensus estimate for 2025 and 2026 earnings indicates 6.3% and 1.4% rise, respectively. Its EPS estimates for 2025 and 2026 have moved upward over the past 30 days.
NLY Estimate Revision Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ABR’s 2025 sales suggests a year-over-year decline of 17.9%, while for 2026, it indicates an increase of 2.5%. Likewise, the consensus estimate for 2025 earnings implies a fall of 32.2%, while for 2026, it calls for a rise of 12.3%. The company’s EPS estimates for 2025 and 2026 have moved downward over the past 30 days.
ABR Estimate Revision Trend
Image Source: Zacks Investment Research
NLY or ABR: Which Stock to Bet On?
In the battle between Annaly and Arbor Realty, NLY clearly emerges to be a better pick. Its robust liquidity, more sustainable dividend (even with a high yield), improving financial outlook and attractive valuation make it a smarter choice for income-focused investors.
In contrast, ABR faces mounting credit risks, a recent dividend cut and a weaker liquidity position, making it a riskier bet with less upside potential.
Annaly currently carries a Zacks Rank #3 (Hold), while Arbor Realty has a Zacks Rank of 4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.