Should You Buy AGNC Investment While It's Below $10?

The big draw with AGNC Investment (NASDAQ: AGNC) is its almost-too-good-to-believe 15%+ dividend yield. Don't get overly excited, however. The real estate investment trust (REIT) is pretty clear that it is a total return investment and not an income investment. That means you need to be extra careful when you buy the stock, since overpaying could materially crimp your returns. Here's what you need to know.

What does AGNC Investment do?

AGNC Investment is a mortgage REIT. It buys mortgages that have been pooled into bond-like securities. The goal is to make the difference between the interest paid on those mortgage securities and the REIT's operating costs (which include the cost of leverage). A lot of companies do the same thing.

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Image source: Getty Images.

AGNC Investment is clear about its goals, however, and dividend investors need to listen to what management says. According to the company's home page, the objective is "favorable long-term stockholder returns with a substantial yield component." That means that total return is the goal, not income. In order to fully benefit from AGNC Investment, you need to reinvest the dividends you collect. Since many dividend investors are looking to live off the income they generate, this REIT is not going to be a good option for a lot of people.

However, if total return is your goal, there's a unique twist here that's worth keeping in mind. Because AGNC Investment's assets are largely made up of the mortgage securities it owns, it is kind of similar to a mutual fund. And like a mutual fund, AGNC Investment reports the value of its portfolio on a per-share basis. In the case of a mutual fund, this figure is net asset value (NAV), and it is reported at the end of every trading day. For AGNC Investment, the number to watch is tangible net book value per share, and it's reported each quarter.

What's AGNC Investment worth?

Clearly, finding out what AGNC Investment is worth each quarter means you are working with old data. But that doesn't mean it's useless. For example, in the first quarter of 2025, the mortgage REIT's tangible net book value per share was $8.25. The stock price today is closer to $9, and nothing material has happened that would suggest that the value of the company's portfolio has increased dramatically.

That makes the question of whether or not to buy AGNC Investment below $10 pretty easy. Yes, you want to pay less than $10. In fact, you want to pay less than $8.25, if you can. What's interesting here is that emotions play a very big role in AGNC Investment's share price. When investors are optimistic, it can trade way above tangible net book value per share. And when investors are pessimistic, it can trade below that figure.

AGNC data by YCharts.

The chart above shows the price swings over the past year. The high-water mark over that span was $10.66, which meant investors were paying a huge premium for the stock. But the low point was $8.12 per share, which was below tangible net book value per share. In other words, patient total return investors can actually get a good deal here, if they keep a close eye on the value of the business.

AGNC Investment is complicated

To be fair, tangible net book value per share is only a rough gauge here, since the data is only provided once per quarter. However, that doesn't mean you should ignore the figure. When AGNC Investment was trading for more than $10 per share, it was very clearly being afforded a material premium. Indeed, if you're looking to buy this mREIT, why not use every tool at your disposal? Buying at or below the most recent tangible net book value per share is one way to increase the chances of getting a good price. That, in turn, will help to maximize the total return you achieve over time.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.