The challenge is that earnings from mortgage backed securities - MBS - are declining while the rate at which Annaly borrows money to leverage the MBS portfolio sits on a floor of basically zero percent short term rates. In the current interest rate environment it appears the company's net interest margin will slowly shrink unless a couple of things happen. If mortgage rates start to increase and borrowing rates stay level, net interest earned and cash for dividends will increase. If short term rates rise faster than mortgage rates, the interest rate spread Annaly earns could be squeezed very tightly, with the possibility of reduced or no dividend until rates change. One point investors must remember is that the rates on mortgages and mortgage securities may not track Treasury rates, especially in a rising rate environment.