Should You Invest $1,000 in AGNC Investment Right Now?

Will AI make the world's archetypal trillionaire? Our squad conscionable released a study connected the 1 little-known company, called an "Indispensable Monopoly" providing the captious exertion Nvidia and Intel some need. Continue »

How harmless is AGNC's monster dividend?

AGNC Investment has maintained its existent monthly dividend complaint of $0.12 per stock since lowering it successful aboriginal 2020. That was 1 of galore outgo reductions the REIT has made implicit the years. AGNC has to trim its dividend payments erstwhile they autumn retired of alignment with its net capacity.

The REIT is presently earning much than capable wealth to screen its dividend. One metric supporting this presumption is its nett dispersed and dollar rotation income, which totaled $0.42 per stock successful the archetypal quarter, easy covering the $0.36 per stock successful dividends it paid out.

However, that was a beardown quarter, driven by impermanent benefits. CEO Peter Federico stated connected the first-quarter league call, "I would picture that [margin] arsenic being supra the long-run economics of the existent environment." He commented that, "I would accidental that astir apt a bully scope of anticipation implicit the comparatively adjacent term, meaning respective quarters, would beryllium precocious 30s and debased 40s." That's inactive a bully scope to enactment the dividend.

Raising superior astatine charismatic rates

Another origin supporting the dividend's sustainability has been the REIT's quality to rise superior astatine charismatic rates. For example, it sold astir $400 cardinal of banal during the archetypal 4th erstwhile the dividend output was astir 13.5%. It was capable to deploy that superior into caller mortgage-backed information (MBS) investments astatine a circular a 16% instrumentality (after factoring successful the associated leverage). "So it's accretive from an net perspective," noted Federico connected the call.

Federico besides pointed retired that the institution tries to beryllium opportunistic, "waiting for the close accidental to deploy those proceeds and assets astatine truly charismatic instrumentality levels." Its patience paid disconnected successful the archetypal quarter, erstwhile it raised superior that it dilatory deployed arsenic the close opportunities arose. Meanwhile, the institution maintains a important liquidity presumption -- $7 cardinal successful unencumbered currency and MBS -- giving it the flexibility to capitalize connected aboriginal marketplace opportunities.