1 week ago
15
Geoffrey Seiler, The Motley Fool
Fri, April 24, 2026 astatine 11:56 AM CDT 3 min read
It's been a volatile commencement to the twelvemonth for AGNC Investment (NASDAQ: AGNC), but the banal has crept backmost into affirmative territory pursuing its first-quarter net report, and it inactive sports a much than 13% dividend yield.
AGNC is simply a owe existent property concern spot (mREIT) that holds an assortment of bureau mortgage-backed securities (MBS). Because these bonds are backed by authorities agencies, they transportation virtually nary default risk, but their carrying values are greatly affected by movements successful owe spreads and involvement rates.
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One bully affirmative successful the 4th was that AGNC generated $0.42 per stock successful nett dispersed and income from dollar rolls (a hedging strategy utilized successful MBS markets to debar losses erstwhile MBS values decline). This is what AGNC mostly uses to wage retired its dividend, and it was a beardown fig boosted by an summation successful its mean involvement spread.
AGNC generates income from the dispersed betwixt the MBS it holds and its backing costs, truthful the mean involvement dispersed is an important metric. It roseate from 1.81% successful the December 4th to 2.06% successful Q1.
The warfare successful Iran, not surprisingly, spurred a formation to safety, widening the output dispersed betwixt Treasury yields and MBS. This reversed an earlier tightening of spreads to commencement the twelvemonth aft President Donald Trump asked authorities agencies Fannie Mae and Freddie Mac (together referred to arsenic government-sponsored enterprises, oregon GSEs) to bargain $200 cardinal of bureau MBS.
The effect was that AGNC's tangible publication worth (TBV) dropped $0.50 per stock to $8.38 astatine the extremity of Q1 from $8.88 astatine the extremity of 2025. TBV is fundamentally the worth of AGNC's MBS portfolio, and the metric connected which mREITs are typically valued. Positively, the institution said its TBV has already rebounded 6% successful April, oregon 5% aft taking its dividend accrual into account.
AGNC paid retired $0.36 per stock successful dividends successful the quarter. When combined with its driblet successful TBV, this gave it a full economical instrumentality connected tangible communal equity of antagonistic 1.6%.
AGNC's nett dispersed and income from dollar rolls fell beneath its dividend payout successful the 4th quarter, truthful Q1 was a bully bounce-back 4th for the mREIT. Meanwhile, its TBV has recovered successful April. If the warfare ends soon, the situation for MBS seems overmuch much favorable arsenic the authorities looks to amended lodging affordability, including the GSEs perchance buying bureau MBS.
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