Is Annaly Capital Stock a Millionaire-Maker?

By Reuben Gregg Brewer – Dec 18, 2025 at 8:05PM ESTKey PointsAnnaly Capital is a mortgage real estate investment trust.The company's dividend yield is an astonishingly high 12.5%.It is best not to view Annaly Capital as an income stock.These 10 Stocks Could Mint the Next Wave of Millionaires ›NYSE: NLYAnnaly Capital ManagementMarket Cap$15BToday's Changeangle-down(0.80%) $0.18Current Price$22.60Price as of December 18, 2025 at 4:00 PM ETAnnaly Capital could help build a million-dollar nest egg, but only if you understand what management is trying to achieve.Investors should exercise caution when considering Annaly Capital (NLY +0.80%) and its huge 12.5% yield. This is because too much of a good thing can sometimes turn out to be a bad thing. Here's how Annaly Capital could help you build a million-dollar portfolio -- and why a huge dividend yield doesn't make this mortgage real estate investment trust (REIT) a reliable dividend stock.

What Annaly Capital is not Annaly Capital raised its dividend at the start of 2025. There's a saying among dividend investors that the safest dividend is the one that has just been raised. That makes Annaly's shockingly large 12.5% dividend yield sound like a great opportunity for dividend lovers. Before you buy into this logic, however, it's important to understand just how large the dividend really is. Image source: Getty Images. The S&P 500 index (^GSPC +0.79%) currently yields around 1.1%. The average financial stock yields 1.3%. The average real estate investment trust has a yield of 3.9%. Annaly Capital's yield is more than three times larger than the yield of the average REIT, nearly 10 times larger than the average finance stock, and over 11 times the size of the yield offered by the market! More conservative investors will likely believe that a yield that large has to come with some strings attached. It does. As the chart below highlights, Annaly Capital's dividend has been highly volatile over time. Furthermore, despite the recent increase, the dividend had been trending lower for years. Worse still, the stock price tends to follow the dividend up and down. NLY data by YCharts. The math behind dividend yield is simple, as it is just the annualized dividend divided by the share price. The dividend and price dynamics have resulted in the dividend yield being in double digits for most of the company's history. In other words, despite the volatile dividend, Annaly always appears on high-yield lists.Advertisement ExpandNYSE: NLYAnnaly Capital ManagementToday's Change(0.80%) $0.18Current Price$22.60Key Data PointsMarket Cap$15BDay's Range$22.47 - $22.7552wk Range$16.59 - $22.98Volume6.1MAvg Vol7.2MGross Margin99.61%Dividend Yield12.27% A better way to view Annaly Capital If you're a traditional dividend investor, you're likely seeking a company that offers a sustainable, if not growing, dividend. The goal is likely to generate income that you can use to pay for living expenses, perhaps in retirement as a supplement to Social Security. Annaly Capital has not yet proven that it can provide the kind of reliability that most dividend lovers crave. However, that does not mean it is a bad company. Nor does it mean it can't help the right investor become a millionaire. You just need to use Annaly the right way in your portfolio to achieve that end. NLY Total Return Price data by YCharts. As the chart above highlights, the REIT's total return since its inception is actually better than that of the S&P 500 index. Moreover, Annaly Capital's performance has been dramatically different than that of the broader index. This is a total return-oriented investment (which requires dividend reinvestment) that can offer valuable diversification benefits when used as a part of a larger portfolio. In that context, it could very easily help an investor build a seven-figure nest egg. Make sure you understand what you are buying Don't be swayed by Annaly Capital's high yield. Its history clearly shows that its dividend payout isn't fixed. You need to fully understand what you are buying, noting that the mortgage securities it purchases put it into a unique and complex niche within the broader REIT sector. You will need to do some extra legwork to understand the company's business. However, if you are specifically looking for a reliable dividend stock, you'll likely be disappointed by Annaly, even though it has rewarded total return-focused investors quite well over time.Read NextDec 10, 2025 •By Reuben Gregg BrewerCould Buying Ultra-High-Yield Annaly Capital Stock Today Set You Up for Life?Dec 6, 2025 •By Reuben Gregg BrewerBetter Dividend Stock: Annaly Capital vs. Realty IncomeNov 18, 2025 •By Reuben Gregg BrewerIs Annaly Capital Stock a Millionaire Maker?Nov 16, 2025 •By Reuben Gregg BrewerCould Buying Annaly Capital Stock Today Set You Up for Life?Nov 16, 2025 •By Reuben Gregg BrewerShould Investors Add This Dividend-Generating REIT to Their Portfolios?Nov 11, 2025 •By Lawrence Rothman, CFAShould You Buy Annaly Capital Management Stock Right Now?About the AuthorReuben Gregg Brewer is a contributing Motley Fool stock market analyst covering energy, utilities, REITs, and consumer staples. He is the former director of research at Value Line Publishing, where he rose from mutual fund analyst to equity analyst before leading all research operations. Reuben holds a bachelor’s degree in psychology from SUNY Purchase, a master’s in social work from Columbia University, and an MBA from Regis University. He has been featured as a financial expert on CNBC and in the Financial Times, Barron’s, and InvestmentNews.TMFReubenGBrewerStocks MentionedAnnaly Capital ManagementNYSE: NLY$22.60 (+0.01%) $+0.18S&P 500 IndexSNPINDEX: ^GSPC$6774.76 (+0.01%) $+53.33*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.Advertisement