Agnc Investment (Nasdaq: Agnc) One of the most dividends yields in the market is sitting at about 16%. But in the last few years, the price of a share which has steadily declined, it is right to ask investors: is the payment durable, and more importantly is the stock is a purchase today?

For unfamiliar people, Agnc is a mortgage Real Estate Investment Trust (MRIIT) Hostage securities (MBS)Mainly guaranteed Fanny me And Freddy MacBecause these securities are supported by government agencies, they actually do not take any credit risk. But the business of Agnc is far from the risk-free, and the story here becomes complicated.

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Why AGNC has struggled

In the last few years, the biggest issue in front of AgNC is high mortgage interest rate. There are two main issues that have raised rates.

One is that the Federal Reserve attacked the benchmark interest rates a few years ago to deal with inflation. As a result, the mortgage rate also climbed. However, this was not the only reason for bullet in hostage rates.

The spread between MBS yield and treasury yield also became quite wide. During the Covid-19 epidemic, the Fed was a very large buyer of MBSS, which reduced the yield and narrowed the yield spread between MBS and the Treasury. However, after the epidemic, it stopped buying MBS and began to roll his balance sheet as it matured. At the same time, banks also started buying MBS as bond prices fell, and the collapse of Silicon Valley Bank, which was heavy in long -term MBSS, pushed banks away from MBS market only.

During this period, the value of the MBS portfolio of AGNC, as measured by its tangible book value (TBV), drowned. From the end of 2021 to the end of 2023, the tangible book of Agnc fell from $ 15.75 to $ 8.70 per share. It has slipped a little more since then, and the Q1 stood at $ 8.25 at the end of 2025. Finally, where the TBV of the Agnc goes, its stock is sure to follow.

Can you rotate things?

Despite the rough stretch AGNC has seen, the setup for stock now looks much more favorable. Fed Chairman Jerome Powell has indicated that higher rate cuts may be on the table, and their estimates of the fed point to low rates in the ahead years. This should be a better environment for Agnc.

Fed rate cuts can benefit Agnc in two main ways. First, it will probably reduce its short -term funding cost; Agnc tries to borrow money to invest in MBSS with prolonged maturity and high yields. Second, low rates can help increase your TBV by promoting MBS evaluation.

Over the years, the treasury yield curve was inverted, meaning that, like two years, short -term treasures, like 10 years, were more yield than long -term treasury. Not surprisingly, it is not a good environment for a company that generates its income from the spread between short and long -term rates.

Now, the Agnc actively removes its funding costs to better align them with a duration of its MBS assets. However, it is not able to completely offset the pressure from an inverted curve in the extended period of time. At the end of the previous year, however, for the end of the previous year to the end of the yield curve (long -term yields exceeds short -term yields), however, the AgNC stands to benefit from broad proliferation.

The portfolio of AgNC is also well deployed if MBS yields start falling. More than 80% of its holdings carry coupons of 6% or less, which helps limit pre -payment risk. Preperage risk is the highest when the owners of the house begin refinance in low-rate mortgage, forcing the hostage REIT to reinstate the low yielding MB.

Is dividend safe?

While high dividends are attractive, they can also be a warning signal. However, Agnc has maintained payment through a very difficult environment, sometimes at the cost of low tangible book price.

It is not appropriate to say that the dividend is completely safe, but if the yield curve continues, dividends should become more durable.

Image Source: Getty Image.

Is AGNC buying now?

If MBS-to-Treasury yield historically spreads narrowly spread by widespread levels, banks or other institutions resume MBS market, AGNC can see a meaningful recovery in both its book price and share price. This is the best case. However, even though he does not play outside, Agnc still has space to give solid total returns.

The company pays a monthly dividend of $ 0.12 per share, which is equal to about 16% of the yield based on recent prices for stock. This dividend income alone puts it in a strong position to perform better in a market which seems to have stopped. Even with a modest portfolio price recovery, Agnc may give 20% to 25% total returns over the next few years.

Overall, I will consider Playing AGNC a high-risk, high-inam income. However, the stock has already taken up the brunt of high interest rates and comprehensive MBS-to-linear yield spread, and the current environment may eventually turn to its favor. The wild card is whether historically a broad MBS-to-linear spreads, because if they do, the opposite may be important.

Those who understand investors and are comfortable with risks, AGNC provides great yield with strong capacity. It is not a set-it-foregate-stei stock, but at current prices, it can be a smart investment for income-focused investors over the next few years.

Should you invest $ 1,000 in Agnc Investment Corp?

Consider that before you buy stock in Agnc Investment Corp, consider:

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