AGNCL: What's Next For AGNC Preferreds After The Fed Cut And Rally

(13min)

Summary

  • AGNC preferreds have rallied in 2024 alongside the broader income market due to a strong macro backdrop and Fed rate cuts.
  • Within the preferred suite, we like AGNCL and floating-rate AGNCO, trading at yields of 7.7% and 9.8% respectively. We see a yield upside for AGNCL and a downside for AGNCO.
  • Redemption risk for floating-rate preferreds is mitigated by high yields and modest price impact.
  • The yield upside of AGNCL from higher longer-term rates makes it a valuable part of an income portfolio despite significant outperformance over the past year.
  • Looking for more investing ideas like this one? Get them exclusively at Systematic Income. Learn More »

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Income assets have had a strong run so far in 2024, buoyed by a strong macro backdrop and the start of the Fed rate cut regime. In this article, we take another look at the mortgage REIT AGNC preferreds which have

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This article was written by

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ADS Analytics is a team of analysts with experience in research and trading departments at several industry-leading global investment banks. They focus on generating income ideas from a range of security types including: CEFs, ETFs and mutual funds, BDCs as well as individual preferred stocks and baby bonds.

ADS Analytics runs the investing group Systematic Income which features 3 different portfolios for a range of yield targets as well interactive tools for investors, daily updates and a vibrant community.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of AGNCO, AGNCL 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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