AGNC Investment Gains 14.2% in 6 Months: Should Investors Buy It Now?

Core Insights - AGNC Investment Corporation (AGNC) shares have increased by 14.2% over the past six months, outperforming the industry growth of 2.3% and the S&P 500 Index's rise of 11.8% [1] - The company's peers, Annaly Capital Management (NLY) shares have risen by 14.8%, while Starwood Property Trust, Inc. (STWD) shares have decreased by 13.1% during the same period [1] Performance Drivers - Easing mortgage rates have positively impacted AGNC's performance, with the average rate on a 30-year fixed-rate mortgage dropping to 6.15% as of December 31, 2025, down from 6.91% a year ago [5][6] - The Federal Reserve's interest rate cuts, including a 75 basis point reduction in 2025, are expected to ease earnings pressure and support AGNC's net interest income [7] - AGNC's disciplined and active portfolio management, including substantial hedges covering 68% of its outstanding investment securities, has helped mitigate risks from market fluctuations [9][10] Portfolio and Asset Management - AGNC maintains a significant exposure to Agency mortgage-backed securities (MBS), totaling $90.1 billion as of September 30, 2025, which supports its long-term growth outlook [12] - The company has actively adjusted its portfolio to reduce risks associated with interest rates and prepayments, focusing on higher-coupon investments [9][10] Financial Position - AGNC has a decent liquidity position, with $7.2 billion in liquidity as of September 30, 2025, allowing for opportunistic portfolio enhancements [13] - The company's leverage increased slightly to 7.6X, but remains at a conservative level, enabling effective capital deployment [14] Capital Management and Dividends - AGNC has committed to shareholder value through a new share repurchase program of up to $1 billion, authorized through December 31, 2026 [15][16] - The company currently offers a dividend yield of 13.43%, which is above the industry average of 12.60% [17] Market Challenges - AGNC's performance is sensitive to macroeconomic trends, with volatility in the mortgage market and interest rate swings affecting investment returns [20] - Despite easing mortgage rates, ongoing pressures in the residential mortgage sector pose significant near-term challenges for AGNC [21] Analyst Outlook - Analysts have a neutral stance on AGNC's earnings growth potential, with estimates indicating an 18.6% decline for 2025 and a modest growth of 1.3% for 2026 [25] - AGNC's price-to-book (P/B) ratio of 1.18X is above the industry's 0.96X, suggesting limited upside potential despite a favorable dividend yield [26][28]