AGNC INVESTMENTS (AGNC 3.01%) Amazing dividend yield. The real estate investment trust (REIT) pays a monthly dividend which currently yields more than 14%. This is more than ten times more than S&P 500Has a yield of 1.2%.
At that rate, $5,000 Investing in REITs Thousands of dollars in dividend income can be generated over the next five years.
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a monstrous income stream
AGNC Investments currently pays monthly dividend $0.12 per share ($1.44 annualized). With its share price recently hovering around $10.15 per share mortgage REIT The yield is 14.2%. At that price, you can buy 492 shares for $5,000.
Those shares would generate a monthly dividend income of $59.04 and an annual dividend income of $708.48. Assuming AGNC Investments maintains its dividend, you’ll collect $3,542.40 in dividend income over the next five years.
Given AGNC’s historical track record, it is more likely to maintain than increase its dividend in the future. The mortgage REIT has paid the same monthly dividend rate since resetting payout levels in early 2020.
today’s change
(-3.01%) $-0.30
current price
$9.84
key data points
market cap
$11B
day limit
$9.84 -$10.08
52wk range
$7.85 -$12.19
volume
730K
average volume
22m
gross margin
100.00%
dividend yield
14.20%
How safe is the dividend?
High-yield dividend stocks have a higher risk profile than low-yield companies. AGNC Investing is no exception. The mortgage REIT has cut its dividend several times over the past few years, including in early 2020 when it cut its monthly dividend from $0.16 per share to $0.12 per share.
AGNC Investments has a high-risk business model. This agency invests in mortgage-backed securities (MBS; pools of residential mortgages guaranteed against credit losses by government agencies). fannie mae) on leveraged basis. The use of leverage increases returns (currently 13% to 15% compared to the low single digits for MBS). As long as its returns are above its costs, the REIT can maintain its dividend.
This is the situation at present. During the fourth quarter, the company’s total cost of capital after taking into account operating expenses and dividend payments was 15.8%. With a 16% return on equity in the quarter, AGNC’s dividend remained well aligned with its cost of capital. The company believes it can continue to generate favorable returns in the current environment, which bodes well for its ability to maintain its dividend levels.
However, if the market environment for agency MBS deteriorates significantly and its returns no longer correspond to its costs, the REIT may need to reset its dividend yield. Even if AGNC does cut its dividend, investors will still be able to generate significant dividend income over the next five years.
Potential to collect lots of dividend income
AGNC Investment provides opportunities to investors collect huge amounts of dividend income. A $5,000 investment could generate more than $3,500 in income over the next five years if the REIT maintains its dividend. Although it has a greater risk of a larger payout being cut over a period of time, the REIT should still generate considerable income even if it needs to cut its payout again.