AGNC Investment: An 11% Dividend Yield Looking A Lot Safer

Gary J. Gordon
3.06K Followers

Summary

  • AGNC is a REIT that owns mortgage-backed securities (MBS) on a leveraged basis.
  • Its Q2 results showed strong operating earnings, but a sharp drop in book value. What does this mixed news say about the future of the dividend?
  • The company argues, and I agree, that MBS investing has reached an inflection point from a negative to a positive operating environment.
  • As such, I am confident that AGNC can maintain its $1.44 annual dividend and perhaps increase it in the next year or two.

Mortgage-backed security MBS, financial concept : House model, stacks of rising coins, loan bags on a table over green background, depicts raising fund from a bank to buy home or properties or assets

William_Potter

AGNC Investment, for those not familiar with it, is a REIT that invests in mortgage-backed securities (MBS) on a leveraged basis. As such, it earns interest income by managing the complex interest rate risks of mortgage investing. The credit risk of the mortgages in the MBS

This article was written by

3.06K Followers
Gary Gordon’s career was on Wall Street, where he was a stock analyst covering the housing, mortgage and consumer finance industries. He also served as a U.S. investment strategist and as a portfolio manager. The bulk of his work career was at PaineWebber and UBS. He is now retired. Mr. Gordon is an adjunct professor at Mercy College in New York. He teaches economics on campus and math at prisons (Sing Sing and Taconic in New York). He also presents financial literacy seminars to adults and students. He is on the Board of Hudson Link (college education for incarcerated men and women) and the Baron de Hirsch Fund. Mr. Gordon is married with two young adult children. He has degrees from Colgate University (BA '74, philosophy) and The Wharton School (MBA '77, finance).

Analyst’s Disclosure:I/we have a beneficial long position in the shares of AGNC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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