AGNC Investment: Hedging Actions Protect 9% Yielding Preferreds

Summary

• AGNC Investment Corp.'s preferred shares, especially AGNCO, offer a safer high-yield alternative amid economic uncertainty and rising interest rates.
• AGNC's hedging strategies, including interest rate swaps and shorting US Treasury bonds, have effectively offset borrowing costs and supported net interest income.
• Skepticism remains for AGNC's common shares due to dilution and declining tangible book value, despite a high dividend yield.
• Preferred shares provide more capital protection and are less likely to have dividends eliminated, making them a better investment choice.

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Introduction

AGNC Investment Corp (NASDAQ:AGNC) is a real estate investment trust that invests primarily in agency backed mortgage securities, also known as an mREIT. I've been critical of investing in this company, with

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.