Core Viewpoint - AGNC Investment offers an attractive dividend yield of over 14%, but potential investors should carefully consider the associated risks and the price they pay for the stock [1][2][3] Dividend Yield and Risks - The S&P 500 index yields 1.2% and the average REIT yields approximately 3.9%, making AGNC's yield appear very appealing for income-focused investors [2] - High yields are common in the REIT sector, but a 14% yield indicates additional risks that investors must acknowledge [3] - AGNC has experienced a steady decline in dividends over the years, which is contrary to the expectations of most dividend investors [4][5] Stock Price and Tangible Net Book Value - AGNC's stock price is closely tied to its portfolio value, which is represented by its tangible net book value per share, reported at $8.41 at the end of Q4 2024 [7] - The tangible net book value fluctuates daily based on various factors, including interest rates and housing market dynamics [8] - If AGNC's stock price exceeds its tangible net book value, investors may be overpaying for the stock [9] Equity Issuance and Book Value Accretion - In Q3 2024, AGNC issued $781 million in common equity, benefiting from a price-to-book premium, which contributed to book value accretion [10] - The CFO noted that the premium allows the company to acquire more securities than it could at the current market rate [10] Investment Considerations - Investors should avoid paying above the tangible net book value unless they have strong conviction that the value will increase [11][12] - Given the complex nature of AGNC's investment profile, conservative dividend investors may be better off avoiding this stock [13]

Group 1 - AGNC (NASDAQ: AGNC) is reporting a more stable marketplace, indicating a valued position for future growth [1] - The stock price of AGNC has impressed Wall Street, now exceeding $10 [1] Group 2 - The article reflects the author's long-term investment experience, including surviving major market crashes [1] - The author utilizes trading systems developed with TradeStation, benefiting from both buy and hold strategies as well as trading [1]

Core Viewpoint - AGNC Investment Corp. reported mixed fourth-quarter results for 2024, with both revenue and earnings missing consensus estimates, raising concerns about its dividend sustainability despite a high dividend yield [1][4][6]. Financial Performance - AGNC reported a comprehensive net loss of $0.11 per share in Q4 2024, compared to a comprehensive income of $0.01 per share in the same quarter of the previous year [5]. - The average tangible net book value "at risk" leverage ratio decreased to 7.2X from 7.4X year-over-year, contributing to a negative 0.6% economic return on tangible common equity for the quarter [6]. - The average asset yield on AGNC's portfolio increased to 5.02% in Q4 2024 from 4.55% in Q4 2023, indicating improved asset performance [7]. Dividend Policy - AGNC maintains a high dividend yield of 14.59%, significantly above the industry average of 11.39%, which attracts income-focused investors [9]. - The company has a share repurchase plan, recently authorizing up to $1 billion in stock buybacks through December 31, 2026 [10]. Market Position and Strategy - AGNC focuses on agency mortgage-backed securities (RMBS), which are backed by U.S. government agencies, positioning it favorably in the market [12]. - The management believes that the agency MBS market could benefit from a steepening yield curve and reduced rate volatility, leading to a positive economic return of 13.2% in 2024 [14]. Interest Rate Impact - AGNC's performance is heavily influenced by the interest rate environment, with higher rates since early 2022 leading to a significant drop in net interest income from $965 million in 2022 to just $18 million in 2024 [17]. - The company's book value per share declined by 17% from December 31, 2022, to $8.41 as of December 31, 2024, due to rising borrowing costs and spread risks [17]. Valuation - AGNC is currently trading at a forward 12-month price-to-tangible book (P/TB) multiple of 1.05X, which is higher than the industry average of 0.88X and more expensive than peers like NLY and EARN [20][23]. Earnings Estimates - The Zacks Consensus Estimate for AGNC's earnings shows a year-over-year decline, with estimates for the current year at $1.63, down from $1.88 the previous year, indicating a potential 13.30% decrease [27].

Core Insights - AGNC Investment Corp. reported a fourth-quarter 2024 net spread and dollar roll income per common share of 37 cents, missing the Zacks Consensus Estimate of 42 cents and declining from 60 cents in the year-ago quarter [1][2] - The company experienced a comprehensive loss per common share of 11 cents in the fourth quarter, compared to a comprehensive income of 1 cent per share in the same quarter last year [2] Financial Performance - Adjusted net interest and dollar roll income for the fourth quarter was $405 million, down 18.5% from the previous year [2] - For the full year 2024, net spread and dollar roll income per common share was $1.88, missing the consensus estimate of $1.95 and down from $2.61 in 2023 [3] - Adjusted net interest and dollar roll income for 2024 was $1.8 billion, reflecting a 9% increase from 2023 [3] Income and Expenses - Net interest income (NII) for the fourth quarter was $115 million, missing the Zacks Consensus Estimate by 23.7%, with net interest expenses of $26 million in the prior-year quarter [4] - For 2024, NII was reported at $18 million, significantly below the Zacks Consensus Estimate of $314 million, but improved from $246 million in net interest expenses in 2023 [4] Asset Management - The average asset yield on AGNC's portfolio increased to 5.02% in the fourth quarter, up from 4.55% in the same quarter of 2023 [4] - The combined weighted average cost of funds rose to 2.89% compared to 1.39% in the fourth quarter of 2023 [5] - The average net interest spread decreased to 1.91%, down from 3.08% in the previous quarter [5] Portfolio and Valuation - As of December 31, 2024, AGNC's investment portfolio totaled $73.3 billion, including $65.5 billion in Agency mortgage-backed securities [7] - The tangible net book value per common share was $8.41, down 3.3% year-over-year [6] - The economic return on tangible common equity was negative 0.6%, compared to 12.1% in the year-ago quarter [6] Dividend Information - AGNC announced a dividend of 12 cents per share for each month of the fourth quarter, totaling $0.36 per share [9] - Since its IPO in May 2008, the company has declared $14 billion in common stock dividends, equating to $48.64 per share [10] Strategic Outlook - The fourth-quarter results were positively influenced by increased asset yields and higher net interest spreads, while the company's strategic portfolio repositioning is designed to mitigate the impacts of higher interest rates and prepayments [11]

STOCKHOLDER PRESENTATION Q4 JANUARY 28, 2025 THE PREMIER AGENCY RESIDENTIAL MORTGAGE REIT © 2025 AGNC Investment Corp. All Rights Reserved. 2 CAPITAL STRUCTURE HIGHLIGHTS | AGNC Common Stock | | | --- | --- | | Ticker | Nasdaq: AGNC | | IPO Date | May 2008 | | Market Capitalization | $8.3 B | | Total Dividends Paid Since IPO1 | $14.0 B | | Total Stock Return Since IPO2 | 389% | | Dividend Yield | 15.6% | THE OBJECTIVE Favorable long-term stockholder returns with a substantial dividend yield component THE OP ...

Company Performance - AGNC Investment reported quarterly earnings of $0.37 per share, missing the Zacks Consensus Estimate of $0.42 per share, and down from $0.60 per share a year ago, representing an earnings surprise of -11.90% [1] - The company posted revenues of $115 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 23.65%, compared to year-ago revenues of -$26 million [2] - Over the last four quarters, AGNC Investment has surpassed consensus EPS estimates only once [2] Stock Movement and Outlook - AGNC Investment shares have increased by approximately 5.1% since the beginning of the year, outperforming the S&P 500's gain of 3.7% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $0.41 on revenues of $175.2 million, and for the current fiscal year, it is $1.63 on revenues of $815.77 million [7] Industry Context - The REIT and Equity Trust industry, to which AGNC Investment belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact AGNC Investment's stock performance [5][6]

Financial Performance - Comprehensive loss per common share for Q4 2024 was $(0.11), consisting of $0.10 net income and $(0.20) other comprehensive loss[4] - The Company reported a net income of $122 million for the fourth quarter, down from $346 million in the previous quarter[34] - The net income available to common stockholders for the fourth quarter was $86 million, compared to $313 million in the previous quarter[34] - Comprehensive income attributable to common stockholders for Q4 2024 was $(93) million, compared to $513 million in Q3 2024[37] - Economic return on tangible common equity for Q4 2024 was -0.6%, driven by $0.36 dividends per common share and a $(0.41) decline in tangible net book value[4][8] Dividends - The Company declared dividends of $0.12 per share for the fourth quarter, totaling $0.36 per share for the quarter, and has declared a total of $14.0 billion in common stock dividends since its IPO in May 2008[27] - The Company declared a total of $1.44 in dividends per common share for the year 2024[34] - AGNC Investment Corp. has paid over $14 billion in common stock dividends since its inception, demonstrating a strong track record of providing substantial monthly dividend income[49] Investment Portfolio - The investment portfolio totaled $73.3 billion as of December 31, 2024, with $65.5 billion in Agency MBS and $6.9 billion in net forward purchases/sales of Agency MBS[4][10] - Total investment securities at fair value as of December 31, 2024, were $66.348 billion, a decrease of 3% from $68.937 billion in the previous quarter[41] - The company primarily invests in Agency residential mortgage-backed securities (Agency MBS), which are guaranteed against credit losses by Fannie Mae, Freddie Mac, or Ginnie Mae[48] Financial Ratios and Metrics - Tangible net book value per common share decreased by $(0.41) or -4.6% to $8.41 as of December 31, 2024, from $8.82 as of September 30, 2024[4][9] - Average projected portfolio life CPR was 7.7% as of December 31, 2024, down from 13.2% as of September 30, 2024[7][13] - Average asset yield on the investment portfolio was 5.02% for Q4 2024, up from 4.54% in the prior quarter[15] - The annualized net interest spread for Q4 2024 was 1.91%, down from 2.21% in the prior quarter[17] - Average total cost of funds before interest rate swap periodic income was 4.85% in Q4 2024, compared to 5.40% in Q3 2024[39] - Average funding cost for repurchase agreements decreased to 4.86% from 5.41% in the previous quarter[41] Income and Expenses - For the fourth quarter, the Company reported net interest income of $115 million, compared to a net interest expense of $64 million in the previous quarter[34] - Economic interest income for Q4 2024 reached $889 million, an increase from $819 million in Q3 2024[39] - Adjusted net interest and dollar roll income for Q4 2024 was $405 million, compared to $420 million in Q3 2024[39] - Economic interest expense for Q4 2024 was $(484) million, compared to $(399) million in Q3 2024[39] Shareholder Information - The weighted average number of common shares outstanding was 882.8 million for the fourth quarter, compared to 807.2 million in the previous quarter[34] - The company issued 53.2 million shares of common equity through ATM offerings for net proceeds of $511 million in Q4 2024[7][8] Risk Management and Strategy - AGNC utilizes leveraged financing through repurchase agreements and employs dynamic risk management strategies to protect its portfolio from interest rate and market risks[48] - The economic return on tangible common equity includes changes in tangible net book value per common share and dividends declared, providing insight into the company's performance[52] - Forward-looking statements indicate potential risks and uncertainties that could affect future performance, including changes in monetary policy and market conditions[52] Non-GAAP Measures - The company emphasizes the importance of non-GAAP financial measures, such as net spread and dollar roll income, to provide greater transparency into its financial performance[53] - AGNC's non-GAAP measures include adjustments for gains/losses on investment securities and derivative instruments, reflecting a comprehensive view of its income[56] - The company believes that including TBA dollar roll income in its non-GAAP measures is meaningful as it reflects the economic equivalence of holding Agency MBS[56] Communication and Transparency - AGNC's investor relations can be contacted for further information, highlighting the company's commitment to transparency and communication with stakeholders[47]

Core Viewpoint - AGNC Investment Corp. reported its financial results for the fourth quarter of 2024, highlighting a positive economic return of 13.2% for the year, driven by favorable conditions in the Agency MBS market and a stable dividend payout [6][7]. Fourth Quarter 2024 Financial Highlights - The company issued 53.2 million shares of common equity through At-the-Market offerings, generating net proceeds of $511 million [4]. - The tangible net book value per common share decreased by 4.6% to $8.41 from $8.82 in the previous quarter [8]. - The economic return on tangible common equity for the fourth quarter was -0.6%, consisting of $0.36 in dividends per common share and a decline of $(0.41) in tangible net book value per common share [7][9]. Full Year 2024 Highlights - AGNC achieved a total economic return of 13.2% for the year, with dividends declared totaling $1.44 per common share [9]. - The company issued 202.1 million shares of common equity through ATM offerings, raising net proceeds of $2.0 billion [9]. Investment Portfolio - As of December 31, 2024, the investment portfolio totaled $73.3 billion, primarily composed of $65.5 billion in Agency MBS [9]. - The weighted average coupon for fixed-rate Agency MBS and TBA securities was 5.02%, up from 4.90% in the previous quarter [11]. - The average projected constant prepayment rate (CPR) for the portfolio decreased to 7.7% from 13.2% in the prior quarter [12]. Leverage and Liquidity - The company's leverage ratio remained stable at 7.2x as of December 31, 2024, with a significant liquidity position of $6.1 billion in unencumbered cash and Agency MBS [7][20]. - The weighted average interest rate on repurchase agreements decreased to 4.76% from 5.23% in the previous quarter [21]. Management Remarks - The CEO expressed a positive outlook for Agency MBS, citing a favorable investment environment due to the Federal Reserve's shift in monetary policy and declining inflationary pressures [6]. - The company anticipates continued attractive return opportunities in the Agency MBS market, supported by stable spreads to benchmark rates [6].

Core Viewpoint - AGNC Investment Corp. is expected to report its fourth-quarter 2024 earnings on January 27, with a consensus estimate of 42 cents per share, reflecting a 30% decline from the previous year's quarter [1][3]. Financial Performance - AGNC's third-quarter results showed an improvement in average asset yield, while tangible book value remained unchanged [2]. - The consensus estimate for revenues in the upcoming quarter is $215.5 million, compared to negative revenues of $26 million in the same quarter last year [3]. Market Trends - Since September 2024, the Federal Reserve has reduced interest rates by 100 basis points, but mortgage rates have not significantly decreased, with 30-year fixed mortgage rates at approximately 6.8% [4]. - Despite the rise in mortgage demand, refinancing activities and origination volume have remained decent [4]. Asset Management - AGNC's mortgage-backed securities (MBS) holdings are expected to experience elevated prepayment rates, positively impacting net premium amortization and supporting growth in interest income, with a consensus estimate of $813.4 million for interest income, a 7.6% increase from the previous quarter [5]. - The reduction in interest rates is anticipated to positively affect AGNC's net interest income [6]. Valuation and Performance - AGNC's stock is currently trading at a forward price/tangible book ratio of 1.05, above its median level of 1.00 and the industry average of 0.88 [13]. - The company has underperformed the industry in the fourth quarter of 2024, while peers like Annaly Capital Management have outperformed [10]. Investment Outlook - The long-term outlook for Agency MBS remains favorable, with positive supply-demand dynamics and improved monetary policy expected to enhance AGNC's returns [18]. - The Fed's indication of further rate cuts in 2025 is expected to boost AGNC's net interest spread and portfolio book value, providing potential stock support [19]. - AGNC offers a high dividend yield of 14.80%, which is attractive compared to the industry's average of 11.2% [19]. Risks and Considerations - AGNC has a history of cutting dividends during economic distress, which may affect investor confidence [20]. - The company is facing potential earnings pressure due to hedges rolling off, despite a favorable yield curve and refinancing activities [21].

Company Overview - AGNC Investment is a real estate investment trust (REIT) that purchases mortgages bundled into bond-like securities, differing from property-owning REITs which are simpler to understand [2] - The securities AGNC Investment acquires are influenced by interest rate changes and property market dynamics, including repayment rates and housing demand [2] Investment Complexity - Investing in AGNC Investment requires a deeper understanding of the mortgage market, making it more complex than traditional property-owning REITs [3] - Continuous monitoring of management performance is necessary for investors [3] Dividend Analysis - AGNC Investment offers a high dividend yield of 15%, but this comes with significant risks and complexities that may deter risk-averse investors [4] - The dividend has been on a long-term downtrend, which has negatively impacted both income and capital for investors relying on these dividends [5] Total Return Perspective - Despite the declining dividend, AGNC Investment's total return, assuming dividend reinvestment, has been strong and comparable to the S&P 500 index [6][7] - Since its IPO in 2008, AGNC Investment shares have decreased from $20 to approximately $9.50, but investors have received $48.64 in dividends, resulting in a net gain of $37.14 per share when considering total returns [8] Investment Suitability - AGNC Investment may not be suitable for those seeking a reliable income stream, but it can be a good fit for investors focused on total return and those using an asset allocation model [9][10] - The current market conditions present a reasonable opportunity to invest in AGNC Investment, provided investors are willing to conduct thorough research [10]