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AGNC Investment Corp (NASDAQ:AGNC) has been trending for years as yield-chasing investors continue to hype it for its massive dividend.
The mortgage REIT currently offers a monstrous trailing yield of 14.80%, twelve times higher than the S&P 500 (1.3%). But is the high dividend yield sustainable, or is it a trap?
To find out, let’s look at AGNC’s dividend payment history. The REIT has paid dividends for the last 14 years, with a highly volatile stock price and a generally declining yield. The stock price has declined by 60% in the last decade, and the dividend yield has decreased by 8% over the same period.
To put this into perspective, if you invested $10,000 in this stock in June 2014 and used the DRIP strategy, your investment would be worth $13,891. The same amount would have grown to $33,361 if invested in the S&P 500 and $56,618 if invested in the NASDAQ 100 benchmark index.
This shows that despite the double-digit yields, the REIT has underperformed the general stock market. While AGNC may gain reprieve when the interest rates start declining, the impact is likely to be minimal.
Moreover, the downward trend is bound to continue given its weak fundamentals. AGNC’s book value per share has been on a free fall in the last decade, declining from $23.93 in December 2013 to $9.64 in March 2024. A declining book value signifies a shrinking company, likely to fail to sustain its dividend payments. Investors should approach this stock with caution.
There Are Better High-Yield Opportunities
The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through dividend stocks… Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities and Benzinga has identified some of the most attractive options for you to consider.
For instance, the Ascent Income Fund from EquityMultiple targets stable income from senior commercial real estate debt positions and has a historical distribution yield of 12.1% backed by real assets. With payment priority and flexible liquidity options, the Ascent Income Fund is a cornerstone investment vehicle for income-focused investors. First-time investors with EquityMultiple can now invest in the Ascent Income Fund with a reduced minimum of just $5,000.
Don’t miss out on this opportunity to take advantage of high-yield investments while rates are high. Check out Benzinga’s favorite high-yield offerings.
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This article The Little Secret AGNC Investment Corp Doesn’t Want Income Investors To Know originally appeared on Benzinga.com
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