AGNC’s Book Value Fell 17% in One Quarter. Here’s Why I’m Still Not Worried About the 17.5%-Yielding Dividend Just Yet.

Résumé détaillé

AGNC’s book value plunged 17% in one quarter, yet its 17.5%-yielding dividend didn’t budge. Here’s why the payout looks safe for now.

AGNC Investment (NASDAQ:AGNC) reported a 16.9% decline in its tangible book value in the third quarter, a $1.45 drop to $7.13 per share, as surging Treasury yields pummeled mortgage-backed securities (MBS). These headwinds have weighed on its shares, which have lost a quarter of their value over the last three months, driving the mortgage REIT's dividend yield above 17.5%.

Those numbers would make any income investor nervous. However, the mortgage REIT pays its monthly dividend from income, not book value, and that income remains high enough to cover the payout. That's why its monthly dividend didn't budge. AGNC just paid its $0.12-per-share monthly dividend for November, the same rate it has paid since 2020. I'm not worried about the payout, at least for now.

Missed AI's "Act 1"? Act 2 Could Be 16x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »

AGNC's preferred earnings gauge, net spread and dollar roll income came in at $0.37 per share in the third quarter, just above the $0.36 in declared dividends. That's thin, and the trend is moving in the wrong direction: $0.42 in the first quarter and $0.40 in the second.

The squeeze came from rising funding costs. Its average cost of funds rose to 3.09% from 2.89%. That more than offset the slight rise in average asset yield (from 4.89% to 4.95%). If funding costs stabilize, the pressure should ease. On a positive note, AGNC sold $992 million of stock above book value during the quarter, enabling it to add about $2.5 billion of assets at wider spreads, which should help bolster its future earnings capacity.

AGNC's other favored dividend sustainability measure is its return on equity (ROE) compared to its cost of capital. CEO Peter Federico noted on the third-quarter call that the REIT ended the quarter with a total cost of capital of around 19%, including its…

A 17.

Début de l'article, extrait de Yahoo Finance. Pour lire la suite, ouvrez l'article chez le média.