AGNC Investment: The 13% Yield That Actually Pays

Core Viewpoint - AGNC Investment expects to maintain its monthly dividend payment, which currently yields over 13%, significantly higher than the S&P 500's yield of 1.1% [1]. Dividend Payment - AGNC Investment pays $0.12 per share monthly, a rate it has sustained since April 2020 [3]. Investment Strategy - The REIT supports its dividend by investing in Agency residential mortgage-backed securities (MBS), which are guaranteed against credit losses by government agencies like Fannie Mae. This investment is leveraged primarily through repurchase agreements, enhancing returns and risk [4]. Financial Alignment - AGNC can sustain its dividend as long as its investment returns align with its cost of capital. Currently, the REIT's return on equity is between 16% and 18%, while its cost of capital is around 17% after issuing new equity [5]. Market Performance - The current market cap of AGNC Investment is $12 billion, with a stock price of $10.85. The dividend yield stands at 13.27%. The recent quarter is viewed as a low point for earnings, which are expected to improve, thereby enhancing dividend sustainability [6]. Risk Profile - Although AGNC Investment is considered a higher-risk dividend stock, it believes it can continue to pay its current monthly dividend, making it one of the few stocks with a yield above 10% that consistently pays [7].