AGNC vs. NLY: The Strategic Case for Owning Both mREITs in a Diversified High-Yield Portfolio

In the high-yield arena, (mREITs) AGNC Investment Corp. (AGNC) and Annaly Capital Management (NLY) stand out as two of the most compelling names. While both offer double-digit and exposure to the mortgage market, their divergent strategies create a unique opportunity for investors seeking to balance with interest rate resilience. By pairing AGNC's disciplined hedging and active with NLY's diversified risk profile and growth potential, a well-constructed portfolio can navigate the uncertainties of the current .

Dividend Sustainability: AGNC's Prudence vs. NLY's Aggressiveness

, according to data. This suggests AGNC has more room to absorb earnings volatility, a critical advantage in a market where interest rate fluctuations can erode net interest margins. While AGNC has not raised its dividend in five years, its conservative approach has preserved capital distribution stability, . In contrast, , but signals management's confidence in growth.

AGNC's strength lies in its robust liquidity and buyback program. The company , . This disciplined capital management bolsters its ability to sustain dividends even in a challenging rate environment. NLY, meanwhile, has yet to execute its repurchase plan, leaving its capital structure less fortified according to reports.

Interest Rate Resilience: AGNC's Hedges vs. NLY's Diversification

AGNC's focus on agency (MBS) exposes it to prepayment risk but offers lower credit risk. To mitigate , on its debt, . This aggressive hedging strategy, combined with , has improved cash flow visibility and reduced sensitivity to prepayment swings.

NLY, on the other hand, has diversified its portfolio to include (MSRs) and residential credit, which act as . according to market analysis. This allows NLY to offset some of the pressures faced by pure-play agency mREITs. Additionally, NLY's management has highlighted a favorable investment environment, .

The Case for Diversification

The key to unlocking value in this sector lies in balancing AGNC's defensive positioning with NLY's growth-oriented strategy. AGNC's high hedge ratio and active portfolio management make it a resilient core holding, particularly in a rate-hiking cycle. Its Q3 2025 results, , .

NLY, meanwhile, . , , according to market analysis. , .

Conclusion

For investors seeking a that balances stability and growth, AGNC and NLY present complementary strengths. , . By owning both, .