NLY vs STWD: Which Is the Better Buy in 2026?

Same yardstick, side by side (as of August 2026). Valuation lined up like this is most meaningful for two names in the same corner of the market, which these are. Figures are approximate; verify before investing.

Reading it: NLY is the cheaper of the two on forward earnings, but cheaper is not the same as better. Pair the valuation with growth (how far the forward P/E sits below the trailing P/E) and risk (beta) before you decide.

The metrics above tell you which is the marginally better business. The bigger risk for most people is not picking the slightly worse stock, it is over-concentrating. NLY and STWD share themes, so owning both, or adding either to what you already hold, can quietly push a large share of your portfolio into one bet.

This is the part a generic comparison page cannot answer, because it depends on what you own. Connect your brokerage and Walnut shows your real, combined NLY and STWD exposure, flags overlap with your existing positions, and tells you if adding one would tip you past a concentration you are comfortable with, read-only by default, with your login staying at your broker. Walnut is not an investment adviser.

Annaly Capital Management is one of the largest and oldest mortgage real estate investment trusts (mREITs) in the United States. It runs a roughly $107 billion investment portfolio, the bulk of which (about $92 billion as of Q1 2026) sits in highly liquid agency mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae, complemented by growing residential credit and mortgage servicing rights (MSR) sleeves. The business model is essentially a leveraged carry trade: Annaly funds long-dated mortgage assets with short-term repo borrowings, earns the spread between the two, hedges interest-rate exposure with swaps and other instruments, and distributes the profit as dividends under REIT rules.

Full NLY guide

Starwood Property Trust originates and holds loans secured by commercial real estate, and it has widened well beyond that over the years. The company runs four businesses: commercial and residential lending, which carried a ~$17.3 billion commercial loan portfolio and produced ~$185.7 million of second-quarter distributable earnings; infrastructure lending, built on a book bought from GE; a property segment now anchored by the Fundamental Income net lease platform acquired in early 2026; and an investing and servicing arm whose LNR unit is one of the largest special servicers of securitized commercial mortgages in the United States. Total assets reached a record ~$31.8 billion at the end of June 2026. Management sits outside the company at Starwood Capital Group, an external structure that gives the REIT deal flow and also means fees leave the building.

Full STWD guide

Both fit overlapping themes, but they are not interchangeable. The useful comparison is which set of drivers and risks you want exposure to.

• NLY drivers: Wide net interest spread and covered dividend; Diversification into residential credit and MSR.
• STWD drivers: Redeploying idle and non-earning capital; Diversification beyond commercial mortgages.

A faster-growing, richer-valued name usually swings harder, so it suits a longer horizon and a higher tolerance for volatility; a steadier, more cash-generative business suits a more conservative or income-minded investor. The honest test is which set of risks you could hold through a drawdown: The dominant risk is interest-rate and spread volatility: a sharp move in rates or a widening of mortgage spreads can cut book value per share quickly, as seen historically when the stock and dividend both fell. For STWD, commercial real estate credit is the core exposure, and the current numbers are not clean: ~$775 million of loans on non-accrual, ~$920 million of foreclosed assets and roughly ~$1.0 billion carrying the two weakest internal risk ratings.

Growth-minded investors who believe the theme has years to run tend to accept the richer multiple for more upside; value-minded investors lean toward the cheaper forward earnings and steadier profile. Pick NLY if you believe its drivers more; STWD if you believe its. Many investors hold both, but since they share themes, that is a concentrated bet, not diversification. Decide deliberately and check overlap. For the full detail, see the NLY and STWD guides.

NLY. As of July 2026 NLY trades around $22-23 per share, a modest premium to its ~$19.82 Q1 2026 book value. Earnings available for distribution of ~$0.76 covered the dividend, and the net interest spread of ~1.42% (net interest margin ~1.71%) is the key metric to watch quarter to quarter. Trailing-twelve-month revenue was roughly $2.4 billion, but for a levered mortgage REIT book value per share and dividend coverage matter far more than a revenue multiple.

STWD. A mortgage REIT is valued off book value and distributable earnings, not off the revenue line, which for Starwood understates a balance sheet more than thirty billion dollars in size. Shares near ~$16 sit below the ~$17.53 stated book value, a discount that reflects doubt about both the carrying value of troubled assets and the durability of the ~$0.48 quarterly dividend. Analysts trimmed targets in mid-August 2026, with JPMorgan moving to ~$18.50, Wells Fargo to ~$20 and Bank of America to ~$17, a cluster that still implies a narrower discount than where the stock trades.

Headline figures (approximate, JULY 2026): NLY shows market cap ~$16 billion, book value per share (q1 2026) ~$19.82, dividend yield ~13%, quarterly dividend (q2 2026) ~$0.75/share; STWD shows distributable eps (ttm) ~$1.61, annual dividend / yield ~$1.92 (~12%), book value per share ~$17.53 (undepreciated ~$18.62), price to book ~0.9x.

NLY and STWD are related but distinct: same themes, different businesses and risks. Neither wins in the abstract; the right pick is whichever thesis you actually believe, sized so you are not over-concentrated in one theme. Walnut can show your combined NLY and STWD exposure against your real portfolio. It is not an investment adviser.