AGNC Investment (AGNC 0. Conversely, 94%) is an interesting stock because of the complexity of what it does, in this volatile climate.
Nevertheless, And that complexity bleeds into the way investors need to think this ultra-high-yield mortgage real estate investment trust (REIT) (fascinating analysis).
For some investors, AGNC Investment will be a buy right now (something worth watching), in light of current trends.
For others it is a stock that will never make sense to buy, despite its huge yield (remarkable data). Here's what you need to know.
Why an investor might want to buy AGNC Investment right now AGNC Investment is a mortgage REIT, which is a complex niche of the REIT sector.
You could replicate what a perty-owning REIT does, on a much smaller scale, with a rental perty (noteworthy indeed).
Most investors simply couldn't do what a mortgage REIT does, in today's financial world.
To simplify, AGNC Investment buys mortgages that have been pooled together into bond- securities (remarkable data), considering recent developments. Image source: Getty Images (noteworthy indeed).
The mortgage securities AGNC Investment buys are impacted by a range of factors, including interest rates, housing market dynamics, and mortgage repayment rates (quite telling).
Management is really doing some hard work as it looks to earn more interest from its investments than its cost of capital.
On the other hand, Over the long term, however, AGNC Investment has performed very well, with its total return comparing favorably to that of the S&P 500 index (^GSPC 0.
More importantly, however, is the fact that AGNC Investment's total return file looks materially different from the return file of the S&P 500 index.
Nevertheless, This analysis suggests that is a huge benefit for investors that are concerned diversification, making AGNC Investment an appealing addition to an asset allocation model.
If that's the type of investor you are, AGNC Investment could be an attractive buy right now, amid market uncertainty.
Nevertheless, AGNC Total Return Level data by YCharts AGNC Investment isn't the best dividend stock To this point the ultra-high 15%+ dividend yield hasn't been a direct part of the story.
Meanwhile, That's because the dividend's biggest role in total return is that it gets used to buy additional s.
If you don't reinvest the dividends here, instead using them to pay for living expenses, you are ly to be sorely disappointed with your investment in AGNC.
As the chart below highlights, the dividend can, at best, be described as volatile, considering recent developments. In fact, it has been in a decade-long downtrend, given current economic conditions.
And the stock price has been ing it lower. Less income and less capital are not what most dividend investors are looking for.
Most income-focused investors will be better off avoiding AGNC Investment for this reason. AGNC data by YCharts That doesn't mean AGNC Investment is a bad company.
What the re reveals is dynamic is common in the mREIT space. However, The basic nature of mortgages helps explain it (which is quite significant) (something worth watching).
When you make a mortgage payment you are paying interest and paying down a small portion of the principal. Both of those parts get distributed to AGNC Investment's holders as dividends.
However, And, as such, the value of the portfolio, which is basically the value of the, shrinks over time.
Most dividend investors will be better off with es that can grow, thus increasing their dividend-paying capacity, over time.
On the other hand, There are reasons on both sides of the buy/sell equation AGNC Investment is one of those companies that you really need to understand before you buy it, or you could end up sorely disappointed with your investment.
Nevertheless, That said, if you see it as an attractive total return vehicle, the potential for interest rate cuts in the future could be a catalyst for a rally.
At the same time, But even if that happens, it will still be a less-than-desirable stock for those that are trying to off of the income they generate from their portfolios.