AGNC Investment Remains Comfortable With its 16%-Yielding Dividend Amid the Recent Market Shift

2 weeks ago 10

Matt DiLallo, The Motley Fool

Mon, Apr 28, 2025, 5:24 AM 4 min read

Market volatility has accrued importantly this year. The Trump administration's instauration of reciprocal tariffs spooked the market, causing concerns that we could beryllium heading toward a recession. That drove investors to merchantability disconnected stocks and bonds arsenic they repositioned their portfolios to amended navigate the existent play of uncertainty.

These marketplace changes person already had immoderate interaction on AGNC Investment (NASDAQ: AGNC). Despite that, the mortgage REIT remains comfy with its existent monthly dividend level, which gives it an eye-popping output of much than 16%.

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The CEO of AGNC Investment, Peter Federico, discussed the caller marketplace displacement connected the company's first-quarter net league call. He commented that the tariff argumentation announcement earlier this month "caused volatility to summation importantly crossed each fiscal markets." The contented is that "with the breadth and magnitude of the tariffs being greater than anticipated, recession fears accrued materially."

As a result, banal prices tumbled, and "interest complaint volatility besides accrued substantially. Federico noted that "This involvement complaint volatility and wide macroeconomic uncertainty caused mean fiscal marketplace correlations to interruption down, liquidity to go constrained, and capitalist sentiment to crook negative." He besides stated that the bureau MBS market, which is AGNC's concern focus, "was not immune to these adverse conditions and besides came nether important unit successful aboriginal April."

On a affirmative note, "AGNC was good prepared for the caller marketplace volatility and navigated it without issue," stated the CEO. However, helium commented, "AGNC's nett plus worth was negatively impacted by the owe dispersed widening."

Given the caller marketplace volatility and the diminution successful the book value of the company's assets, an expert connected the telephone asked astir the management's comfortableness level with the dividend.

Federico responded by reminding investors that AGNC's benchmark for dividend stability is its full cost of capital. He went done the mathematics connected the call:

At the extremity of the archetypal quarter, our full outgo of superior and the mode we're calculating our full outgo of superior is the dividends that we wage some connected our communal and preferred stock, positive each of our operating expenses divided by our full tangible superior which astatine the extremity of the archetypal 4th was astir $9.5 billion. And by that measure, it would say that the breakeven instrumentality connected our portfolio to prolong each of those costs was 16.7%.