By Scott Kennedy, Produced with Colorado Wealth Management Fund Introduction AGNC (NASDAQ:AGNC) had a pretty average quarter with results coming in a little weaker than I hoped. They raised a lot of money earlier this year but didn't put it to work as aggressively as some peers. The dividend still looks safe for now, but the stock is priced too high compared to the rest of the sector. I wouldn't be buying here. Even with a slightly disappointing quarter, I believe a risk/performance rating of 3.5 for AGNC r ...

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[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's consolidated financial statements for the period ended June 30, 2025, show an increase in total assets to **$102.021 billion** from **$88.015 billion** at year-end 2024, primarily driven by an increase in Agency securities and repurchase agreements Consolidated Balance Sheet Highlights (in millions) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$102,021** | **$88,015** | | Agency securities, at fair value | $73,232 | $65,367 | | Repurchase agreements (liability) | $69,153 | $60,798 | | **Total Liabilities** | **$91,674** | **$78,253** | | **Total Stockholders' Equity** | **$10,347** | **$9,762** | Consolidated Comprehensive Income Highlights (in millions, except per share data) | Income Statement Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income (Expense) | $162 | $(3) | $321 | $(33) | | Net Income (Loss) | $(140) | $(48) | $(90) | $395 | | Comprehensive Income (Loss) | $(92) | $(66) | $51 | $300 | | Net Income (Loss) per common share - diluted | $(0.17) | $(0.11) | $(0.17) | $0.46 | Consolidated Cash Flow Highlights (in millions) | Cash Flow Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $372 | $0 | | Net cash provided by (used in) investing activities | $(9,171) | $(6,479) | | Net cash provided by (used in) financing activities | $8,900 | $6,614 | - The company operates as a single reportable segment, with the Chief Operating Decision Maker (CODM) evaluating performance based on comprehensive income (loss) and managing the portfolio as a whole[117](index=117&type=chunk)[118](index=118&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported significant market volatility in Q2 2025, leading to wider Agency RMBS spreads and an economic loss of **-1.0%** on tangible common equity for the quarter, while maintaining a constructive outlook due to stabilizing spreads and anticipated regulatory reforms - Financial markets experienced significant volatility in Q2 2025, leading to underperformance in Agency RMBS and an economic loss for AGNC of **-1.0%** for the quarter[123](index=123&type=chunk)[128](index=128&type=chunk) - The company maintains a constructive outlook for Agency RMBS due to stabilizing spreads, expected increased bank demand from regulatory reforms, and reduced risk from potential GSE reform[124](index=124&type=chunk)[127](index=127&type=chunk) Key Performance Metrics (Q2 2025) | Metric | Value | | :--- | :--- | | Total Comprehensive Loss per Share | $(0.13) | | Economic Loss on Tangible Common Equity | -1.0% | | Dividends Declared per Common Share | $0.36 | | Decrease in Tangible Net Book Value per Share | $(0.44) | | Net Spread and Dollar Roll Income per Share (Non-GAAP) | $0.38 | Portfolio and Leverage (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Investment Portfolio | $82.3 billion | | Tangible 'at risk' Leverage | 7.6x | | Unencumbered Liquidity | $6.4 billion (65% of tangible equity) | | Hedge Ratio (vs. Repo/TBA) | 89% | [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to interest rate, prepayment, spread, liquidity, and credit risks, with an estimated duration gap of **0.2 years** as of June 30, 2025, and significant sensitivity to changes in interest rates and mortgage spreads - The company's primary market risks include interest rate, prepayment, spread, liquidity, extension, and credit risks[216](index=216&type=chunk) - The company's estimated duration gap, measuring the difference in interest rate sensitivity between assets and liabilities (including hedges), was **0.2 years** as of June 30, 2025[222](index=222&type=chunk) Interest Rate Sensitivity on Tangible Net Book Value per Share (June 30, 2025) | Change in Interest Rate | Estimated Change in Tangible Net Book Value Per Common Share | | :--- | :--- | | -50 Basis Points | -0.7% | | -25 Basis Points | +0.2% | | +25 Basis Points | -1.2% | | +50 Basis Points | -3.2% | Mortgage Spread Sensitivity on Tangible Net Book Value per Share (June 30, 2025) | Change in MBS Spread | Estimated Change in Tangible Net Book Value Per Common Share | | :--- | :--- | | -25 Basis Points | +13.1% | | -10 Basis Points | +5.2% | | +10 Basis Points | -5.2% | | +25 Basis Points | -13.1% | - As of June 30, 2025, the weighted average projected Constant Prepayment Rate (CPR) for the investment portfolio was **7.8%**, with a **50 basis point** decrease in interest rates projected to increase the CPR to **10.1%**[231](index=231&type=chunk)[232](index=232&type=chunk) [Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the last fiscal quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[244](index=244&type=chunk) - No changes occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[245](index=245&type=chunk) [PART II. OTHER INFORMATION](index=47&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to any material litigation, nor is any material litigation threatened against it, other than routine proceedings arising in the ordinary course of business - As of the report date, the company is not involved in any material legal proceedings[247](index=247&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors that were previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors have been identified since the last Annual Report on Form 10-K[248](index=248&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities in the reported quarter[249](index=249&type=chunk) [Other Information](index=47&type=section&id=Item%205.%20Other%20Information) This section discloses that on May 15, 2025, the company's President and CEO, Peter Federico, adopted a Rule 10b5-1 trading arrangement for the potential sale of up to **137,393 shares** of common stock - On May 15, 2025, President and CEO Peter Federico adopted a Rule 10b5-1 trading plan for the sale of up to **137,393 shares** of common stock[252](index=252&type=chunk) [Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed with or furnished as part of the quarterly report, including certifications by the CEO and CFO, and documents related to the company's incorporation and bylaws - The report includes an index of exhibits, such as the CEO/CFO certifications required by the Sarbanes-Oxley Act and various corporate governance documents[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk)

Core Insights - AGNC Investment's preferred shares are favored by income investors due to their high yields and strong profile [1] - The recent Q2 financial results were not favorable for common shareholders but were very positive for preferred shareholders [1] Group 1 - AGNC Investment reported Q2 numbers that indicate a disparity in performance between common and preferred shares [1] - The company remains a popular choice among income investors, highlighting the attractiveness of its preferred shares [1] Group 2 - The article suggests exploring additional resources such as income portfolios and investor tools for better navigation of investment options [2]

I am focused on growth and dividend income. My personal strategy revolves around setting myself up for an easy retirement by creating a portfolio which focuses on compounding dividend income and growth. Dividends are an intricate part of my strategy as I have structured my portfolio to have monthly dividend income which grows through dividend reinvestment and yearly increases. Feel free to reach out to me on Seeking Alpha Analyst's Disclosure:I/we have a beneficial long position in the shares of QDVO, AGNC, ...

Core Viewpoint - AGNC (NASDAQ: AGNC) offers a leveraged investment opportunity in highly liquid and relatively safe Mortgage-Backed Securities (MBS), with optimal performance dependent on stability in interest rate markets [1] Company Summary - AGNC's investment model is designed to capitalize on the liquidity and safety of MBS, making it an attractive option for investors seeking stable returns [1] - The company has been extensively analyzed in previous writings, indicating a strong interest and ongoing research into its performance and market positioning [1] Industry Context - The performance of AGNC is closely tied to the broader interest rate environment, suggesting that fluctuations in rates could significantly impact its investment outcomes [1]

Core Insights - AGNC Investment Corp. reported second-quarter 2025 results that missed both revenue and earnings estimates due to ongoing tariff concerns and volatility in the mortgage market [1][9] - The tangible book value (TBV) decreased by 7% year over year to $7.81, indicating a decline in the underlying portfolio's value [2][9] - The average net interest spread narrowed to 2.01% from 2.69% a year ago, reflecting increased hedge costs and diminishing benefits [3][9] Financial Performance - AGNC's economic return on tangible common equity was negative 1%, slightly worse than the negative 0.9% from the same quarter in 2024 [3] - Despite challenges, AGNC's average asset yield improved to 4.87% from 4.69% year over year, suggesting potential for better income generation [4] - The company maintains a high dividend yield of 14.8%, compared to the industry average of 12.3%, with a payout ratio of 89% [12] Market Outlook - AGNC continues to focus on agency mortgage-backed securities (MBS), which are guaranteed by U.S. government agencies, positioning itself as a strong player in this market segment [6] - The CEO expressed a favorable outlook for levered and hedged agency MBS investments, noting that mortgage spreads remain elevated by historical standards [7] - Mortgage rates have been declining, with the average 30-year fixed-rate mortgage at 6.74% as of July 24, 2025, down from 6.78% a year ago, which may improve housing affordability and loan demand [8][10] Strategic Initiatives - AGNC has a stock repurchase plan authorized for up to $1 billion through December 31, 2026, which may support share price stability [16] - Year-to-date, AGNC shares have gained 13.7%, outperforming the industry average of 9% [17] - The company is trading at a forward price-to-tangible book (P/TB) multiple of 1.25X, above the industry average of 0.99X, indicating a premium valuation [20]

Core Insights - The article discusses the investment landscape in the real estate sector, particularly focusing on the performance and potential of various real estate investment trusts (REITs) and housing-related companies [2][3]. Group 1: Company Insights - Hoya Capital Research & Index Innovations is affiliated with Hoya Capital Real Estate, providing investment advisory services and market commentary focused on publicly traded securities in the real estate industry [2]. - The commentary emphasizes that it is for informational and educational purposes only, and does not constitute investment, tax, or legal advice [2]. Group 2: Industry Insights - The real estate industry is highlighted as having unique risks associated with investments in real estate companies and housing industry companies, which may not be suitable for all investors [2]. - The article notes that past performance of market data does not guarantee future results, indicating the inherent volatility and unpredictability of the real estate market [3].

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