Better Dividend Stock: Realty Income vs. AGNC

Realty Income (NYSE: O) and AGNC (NASDAQ: AGNC) are some fashionable among income-seeking investors. Realty Income, which owns a portfolio of implicit 15,500 properties crossed the U.S., the U.K., and 7 European countries, is 1 of the world's largest existent property concern trusts (REITs). AGNC, a starring owe existent property concern spot (mREIT), owns a $94.8 cardinal portfolio of mortgage-backed securities (MBS) and mortgages.

As REITs, Realty Income and AGNC indispensable administer astatine slightest 90% of their taxable income to investors to support their little taxation rates. But which high-yielding banal is simply a amended buy?

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Rising involvement rates impact Realty Income and AGNC differently. For Realty, higher rates marque it much costly to bargain caller properties and make macro headwinds for its tenants. But contempt those periodic challenges, its occupancy rates person ne'er dropped beneath 96% since its IPO successful 1994. In fact, its year-end occupancy complaint roseate from 98.6% successful 2023 to 98.9% successful 2025, with maturation from stronger tenants offsetting store closures astatine weaker ones.

AGNC lone owns mortgages and MBS, not carnal properties. It allocates astir of its portfolio to Agency MBS assets, which are backed by Fannie Mae, Freddie Mac, oregon Ginnie Mae. It generates astir of its profits by earning involvement connected those investments. It besides generates currency by selling its ain MBS and agreeing to bargain them backmost astatine a acceptable terms positive involvement astatine a aboriginal date. For those trades to stay profitable, the market's short-term borrowing costs indispensable stay little than its semipermanent ones.

Both companies volition payment from little involvement rates. It volition go cheaper for Realty Income to acquisition caller properties and support precocious occupancy rates, and it volition beryllium easier for AGNC to support a precocious nett involvement complaint dispersed successful its MBS trades. Lower involvement rates volition besides people thrust investors from CDs and T-bills toward higher-yielding REITs.

Realty Income pays a guardant output of 5.3%. For 2026, it expects its adjusted funds from operations (AFFO) per stock to emergence 2%-3% to $4.38-$4.42, which volition easy screen its guardant dividend complaint of $3.24. At $61, it trades astatine conscionable 14 times this year's AFFO per share.

AGNC pays a overmuch higher guardant output of 14.6%. That output seems high, but analysts expect its net per stock (EPS) to emergence 4% to $1.55 successful 2026 and screen its guardant dividend complaint of $1.44. At $10, it besides looks similar a bargain astatine six times this year's net -- but its near-term maturation could beryllium choppy due to the fact that the Fed's complaint cuts successful 2024 and 2025 didn't trim its MBS yields and borrowing costs astatine the aforesaid rate. In different words, it's inactive taking retired loans astatine higher rates to acquisition lower-yielding MBS successful this chilly existent property market.