Should You Invest $500 In AGNC Investment Right Now?
Key Points
Shares of AGNC Investment have rallied this year.
The REIT still offers a monster dividend yield.
- 10 stocks we like better than AGNC Investment Corp. ›
Shares of AGNC Investment (NASDAQ: AGNC) have gotten off to a strong start in 2026. The mortgage REIT is up more than 5% year to date. That rally has pushed its dividend yield down a bit. However, at 12.7%, it's still more than 10 times the S&P 500's yield of around 1.2%.
Here's a look at whether you should invest in the mortgage REIT right now.
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The big draw with AGNC Investment is its lucrative monthly dividend. At its current yield, a $500 investment in AGNC Investment would generate $5.28 of dividend income each month ($63.40 annualized). That's a lot more income than you could earn from most other assets these days. However, it's less than you could have earned from AGNC if you invested a few months ago. The REIT's dividend yield spent much of last year above 14% due to its lower share price.
AGNC Investment's current monthly dividend looks sustainable. The REIT has maintained its payment for more than five consecutive years. That's noteworthy, considering all the interest rate volatility during that period.
The current environment for Agency MBS investments (residential mortgage-backed securities protected by government agencies against credit risk) is strong. That bodes well for AGNC Investment, which focuses exclusively on investing in Agency MBS. It drives the REIT's view that it can continue to generate returns on its investments high enough to cover its cost of capital (operating costs and dividend payments). The REIT also has a strong liquidity position to fund new investments.
Given all this, right now looks like a good time to invest $500 into AGNC Investment if you're seeking a lucrative stream of monthly dividend income above all else. While its current yield isn't as high as it was a few months ago, it's still a lot higher than most alternatives with similar risk profiles. However, if you're seeking higher total return potential (income plus price appreciation), right now might not be the best time to invest in AGNC, given the recent rally in its share price.
Should you buy stock in AGNC Investment Corp. right now?
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Matt DiLallo 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.
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