Latest news with #AGNC
Yahoo
a day ago
- Business
- Yahoo
How Should You Approach AGNC Investment Stock Post Weak Q2 Results?
AGNC Investment Corp. AGNC posted second-quarter 2025 results on July 21, with both top and bottom lines missing the Zacks Consensus Estimates. Amid ongoing tariff concerns and persistent volatility in the mortgage market, AGNC faced a challenging environment for mortgage-backed securities (MBS), which weighed heavily on its financial performance. One of the key metrics for mortgage REITs (mREITs) is tangible book value (TBV), a reflection of the underlying portfolio's value. In the second quarter, AGNC's TBV declined 7% year over year to $7.81. The average net interest spread, a critical indicator of earnings potential, narrowed to 2.01% from 2.69% a year ago. This decline reflects diminishing hedge benefits and rising hedge costs, further pressuring profitability. Adding to the headwinds, economic return on tangible common equity came in at negative 1%, slightly worse than the negative 0.9% recorded in the second quarter of 2024. Despite these challenges, AGNC demonstrated resilience through strong risk management and ample liquidity, enabling the REIT to maintain its portfolio and selectively add assets at attractive prices. Notably, the average asset yield improved to 4.87% from 4.69% in the prior-year quarter, indicating the potential for better income generation in a more favorable rate environment. Given the volatility in the mortgage market and AGNC's underwhelming quarterly performance, how should investors approach the stock going forward? Let us explore the key factors and assess whether AGNC remains a worthy investment in the current environment. AGNC Investment & Agency MBS Outlook AGNC has maintained its focus on agency MBS, a strategy that has positioned it as a strong player in this specialized market segment. AGNC Investment primarily focuses on leveraged investments in Agency residential MBS, including residential mortgage pass-through securities and collateralized mortgage obligations. A U.S. Government agency or a U.S. Government-sponsored enterprise guarantees the principal and interest payments for such investments. While the MBS market experienced some turbulence last quarter, it is still an attractive investment market. During the second-quarter earnings call, AGNC Investment's CEO, Peter Federico, stated, "We continue to have a favorable outlook for levered and hedged Agency MBS investments." He noted that "mortgage spreads to benchmark rates remain elevated by historical standards and range-bound, an extremely favorable return environment." Management noted that MBS spreads have tightened since quarter-end and expects banks and foreign investor demand to grow in the upcoming period. Although the market is extremely competitive, the company's focus on agency MBS puts it in a position to possibly profit from favorable trends. However, execution will be crucial to achieving these advantages. AGNC & Mortgage Rates AGNC Investment's performance and prospects are significantly influenced by mortgage rates. Mortgage rates have been declining lately. Per a Freddie Mac report, the average rate on a 30-year fixed-rate mortgage was 6.74% as of July 24, 2025, down from 6.78% in the same week a year ago. Housing affordability challenges are expected to decline with lower mortgage rates. With rates trending lower and balanced supply/affordability playing out in the mortgage market, loan demand is witnessing an increase. With this, mortgage originations and refinancing volumes are seeing a positive trend. This will likely reduce operational and financial challenges for mREITs like AGNC, and increase the gain on sale margin and new investment activity. The Federal Reserve's decision to keep the interest rate steady after reducing it by 100 basis points in 2024 has helped stabilize the company's funding costs. This will also keep easing earnings pressure for AGNC Investment, which will help the company to increase its dividend payout. AGNC's Impressive Payout One of the closely watched aspects of AGNC Investment's financial profile is its dividend policy. AGNC's current dividend yield is 14.8%. This is impressive compared with the industry's average of 12.3%. This attracts investors as it represents a steady income stream. It currently sits at a payout ratio of 89%. Dividend Yield Image Source: Zacks Investment Research AGNC Investment's peers, Annaly Capital Management NLY and Arbor Realty Trust ABR, are also providing investors with solid dividend options. Annaly Capital Management has an annual dividend yield of 13.4%, whereas ABR has a dividend yield of 9.9%. Dividends aside, AGNC has a share repurchase plan in place. In October 2024, the company's board of directors terminated the existing stock repurchase plan and replaced it with a new plan authorizing it to repurchase up to $1 billion of common stock through Dec. 31, 2026. As of June 30, 2025, full authorization was available for repurchase. AGNC Price Performance & Valuation Analysis Year to date, AGNC Investment shares have gained 13.7% compared with the industry's rise of 9%. Meanwhile, AGNC peers Annaly Capital Management have gained 22.3% while Arbor Realty have declined 7.2% over the same time frame. Price Performance Image Source: Zacks Investment Research From a valuation standpoint, AGNC appears expensive relative to the industry. The company is currently trading at a premium with a forward 12-month price-to-tangible book (P/TB) multiple of 1.25X, above the industry average of 0.99X. AGNC Investment is also trading at a premium compared with Annaly Capital Management and Arbor Realty, which have forward 12-month P/TB of 1.09X and 1.04X, respectively. Price-to-Tangible Book TTM Image Source: Zacks Investment Research How to Approach AGNC Stock? AGNC Investment continues to offer an appealing dividend yield, which may attract income-focused investors. However, recent developments raise concerns about the stock's near-term prospects. The company's weak second-quarter performance, declining tangible book value, and tightening net interest spreads signal underlying challenges. Given the concern, the company's earnings are expected to remain under pressure. Earnings Estimates Image Source: Zacks Investment Research While management maintains a positive outlook on the agency MBS market and macroeconomic conditions show signs of stabilization, its premium valuation indicates limited upside potential, especially in an environment where profitability is under pressure. Given these headwinds and underwhelming fundamental metrics, investors might consider selling AGNC stock. The company currently carries a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AGNC Investment Corp. (AGNC) : Free Stock Analysis Report Arbor Realty Trust (ABR) : Free Stock Analysis Report Annaly Capital Management Inc (NLY) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-07-2025
- Business
- Yahoo
AGNC Investment Q2 Earnings Miss Estimates, Book Value Declines Y/Y
AGNC Investment Corp.'s AGNC second-quarter 2025 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization benefit) of 38 cents missed the Zacks Consensus Estimate of 42 cents. The bottom line declined from 53 cents in the year-ago quarter. Adjusted net interest and dollar roll income of $457 million moved down 5.2% from the year-ago quarter. The company reported a second-quarter comprehensive loss per common share of 13 cents, relatively flat from the year-ago quarter. Results were adversely impacted by a decline in tangible net book value per share (BVPS) and net interest spread. Nonetheless, a rise in average asset yield on the portfolio was positive. Inside AGNC's Headlines Net interest income (NII) was $162 million against net interest expenses of $3 million in the prior-year quarter. The metric missed the Zacks Consensus Estimate by 36.2%. AGNC Investment's average asset yield on its portfolio was 4.87% in the second quarter of 2025, up from 4.69% in the second quarter of 2024. The combined weighted average cost of funds, inclusive of interest rate swap, was 2.86% compared with 2% in the second quarter of 2024. The average net interest spread (excluding estimated "catch-up" premium amortization benefits) was 2.01%, down from 2.69% in the year-ago quarter. As of June 30, 2025, AGNC's average tangible net book value "at risk" leverage ratio was 7.6X, up from 7.4X from the prior-year quarter. In the second quarter, the company's investment portfolio bore an average actual constant prepayment rate of 7.8%, down from 9.2% in the year-ago quarter. As of June 30, 2025, tangible net BVPS was $7.81, down 7% on a year-over-year basis. The economic return on tangible common equity was negative 1% compared with negative 0.9% in the year-ago quarter. This included a dividend per share of 36 cents and a decline of 44 cents in tangible net BVPS. As of June 30, 2025, the company's investment portfolio aggregated $82.3 billion. This included $73.3 billion of Agency mortgage-backed securities, $8.3 billion net forward purchases/(sales) of Agency MBS in the "to-be-announced" market ("TBA securities"), and $0.7 billion of CRT and non-Agency securities and other mortgage credit investments. AGNC Investment's Balance Sheet Position As of June 30, 2025, AGNC's cash and cash equivalents totaled $656 million, down 44.2% from the prior quarter. AGNC's Dividend Update AGNC Investment announced a dividend of 36 cents per share for the second quarter. Management declared $14.7 billion or $49.36 per share in common stock dividends since its initial public offering in May 2008 through the second quarter of 2025. Our View on AGNC Investment AGNC's second-quarter results benefited from an increase in asset yields. The company's portfolio repositioning moves cushion it from higher interest rates and prepayments. However, lower tangible book value per share and net interest spread were concerning. AGNC Investment Corp. Price, Consensus and EPS Surprise AGNC Investment Corp. price-consensus-eps-surprise-chart | AGNC Investment Corp. Quote AGNC Investment currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Upcoming Release Dates of Other REITs Annaly Capital Management, Inc. NLY is slated to report second-quarter 2025 results on July 23. Over the past month, the Zacks Consensus Estimate for NLY's quarterly earnings has been unchanged at 70 cents per share over the past seven days. This indicates a 4.4% rise from the prior-year reported figure. Starwood Property Trust, Inc. STWD is slated to post quarterly results on August 7. Over the past month, the Zacks Consensus Estimate for STWD's quarterly earnings has been revised upward to 46 cents per share over the past seven days. This indicates a decline of 4.2% from the prior-year quarter's reported figure. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AGNC Investment Corp. (AGNC) : Free Stock Analysis Report STARWOOD PROPERTY TRUST, INC. (STWD) : Free Stock Analysis Report Annaly Capital Management Inc (NLY) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Business Insider
20-07-2025
- Business
- Business Insider
Seeking Up to 15% Dividend Yield? Piper Sandler Suggests 2 Dividend Stocks to Buy
Stock investing is all about returns, and the markets have delivered just that since hitting their trough in April. The S&P 500 bottomed out at 4,983 and has since rebounded 26%, bringing its year-to-date gain to 7% and pushing it to record levels. But is there room for more gains? Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. Piper Sandler chief investment strategist Michael Kantrowitz, in a recent interview, explains why he believes that markets haven't hit their ceiling yet, but he acknowledges that all gains have their limits. 'I think it's important to recognize or acknowledge that the last three months' moves were largely pricing out of macro risk. Whether you look at PEs, which have rebounded, or credit spreads, which have compressed, it's been a very macro-led tape where kind of a rising tide has lifted all boats. Going forward, we should not expect this to sustain the same level of returns, of course,' Kantrowitz stated. But investors are still looking for profits, and when the market ceiling is facing limits, high-yield dividend stocks offer a sound choice to maximize portfolio returns. Against this backdrop, Piper Sandler analyst Crispin Love has highlighted two high-yielding dividend stocks to buy – including one with a yield approaching 15%. Let's give them a closer look. We'll start with AGNC, a real estate investment trust, or REIT, whose activities mainly revolve around agency mortgage-backed securities. These assets are guaranteed against credit losses by Federal entities – Fannie Mae, Freddie Mac, and Ginnie Mae – providing a level of protection for investors. AGNC is an internally managed REIT, with a long-term goal of delivering solid returns to its shareholders. That goal is reflected in the company's highly focused investment strategy. AGNC has built a portfolio where 98% of its assets are agency MBS, including pass-through certificates, collateralized mortgage obligations (CMOs), and 'to-be-announced' securities (TBAs) – all carrying federal guarantees that help mitigate credit risk. As of March 31, the portfolio stood at $78.9 billion in value, with over 95% allocated to 30-year fixed-rate assets, underscoring AGNC's preference for stable, long-duration instruments. AGNC's consistent dividend policy is a key reason it stands out among income investors. In fact, the company pays dividends monthly – a less common but appealing feature for those seeking regular income. This monthly cadence allows investors to better match dividend inflows with ongoing expenses. AGNC's most recent declaration came on July 9 for an August 11 payment, maintaining its 12-cent monthly rate. That equates to 36 cents per quarter and $1.44 annually, translating to a generous forward yield of 15.5%. While its dividend track record is attractive, it's worth examining AGNC's underlying financials to assess the sustainability of those payouts. In its latest quarterly report for Q1 2025, the company posted net interest income of $159 million and a non-GAAP EPS of 44 cents. Although NII fell short of expectations by $284 million, the earnings per share came in 3 cents above the consensus. In setting out the Piper Sandler view here, analyst Crispin Love explains why he believes that this REIT will continue to deliver on the dividend. 'Since AGNC's 1Q25 earnings, agency spreads have tightened slightly following significant volatility around Liberation Day. We believe near-term spread levels and mortgage rates should be somewhat range-bound, but we could see continued rate volatility in 2025 given the macro landscape and uncertainty related to economic growth, inflation, and tariffs. Going forward, we believe AGNC can maintain its current dividend level, with AGNC generating mid-to-high teens returns over the near-term,' Love opined. Love's comments back up his Overweight (i.e., Buy) rating on the stock, and his $10 price target implies a one-year upside potential of 8%. Together with the dividend yield, the total one-year return on this stock may approach 23.5%. (To watch Love's track record, click here) Rithm Capital (RITM) The second dividend stock we'll look at is Rithm Capital, a REIT that was founded in 2013 and for the past decade-plus has provided a compelling investment option in mortgage servicing rights (MSRs). Early on, Rithm focused on MSR management; today, its portfolio is more varied, holding a diverse set of real estate assets. In addition to mortgage servicing rights, these assets include residential mortgage loans, commercial real estate, single-family rentals, business purpose loans, and even consumer loans. Building on this expanded investment scope, Rithm took a major strategic step in late 2023 by acquiring the asset management firm Sculptor Capital Management. The $719.8 million deal significantly broadened Rithm's operational reach and brought Sculptor's sizable asset base under its umbrella. The impact of this acquisition is evident in the company's numbers. Rithm now boasts $7.8 billion in total equity and a book value of $12.39 per common share. Its total assets stand at $45 billion, while assets under management have grown to $35 billion – a figure reflecting the addition of Sculptor's portfolio. Diving into specific segments, the company holds over $5.5 billion in mortgage origination and servicing and nearly $850 million in residential transitional lending. These robust figures support Rithm's overarching goal: to deliver stable and attractive long-term returns to shareholders. A key part of that strategy is the dividend, which the company has paid consistently for 12 years. The current quarterly dividend stands at 25 cents per common share, declared most recently on June 18 for a July 31 payment. At the annualized rate of $1, this payout translates to a forward yield of 8.4%. That yield appears well-supported by the company's latest financials. In 1Q25, earnings available for distribution (EAD) came in at $275.3 million, or 52 cents per share – 5 cents ahead of expectations and more than enough to cover the dividend. Checking in again with Piper Sandler's Crispin Love, we find that the analyst has a lot to say about Rithm – and it's mostly positive. 'With 30-year mortgage rates keeping the origination outlook still far from a normalized environment, we are focused on names that can perform in this higher for longer backdrop. One name that stands out to us for multiple reasons is RITM. Rithm is a diversified business across mortgage and asset management and is currently trading at just 5x earnings. On the mortgage side, RITM is the #3 mortgage servicer in the US which is an annuity like business that can actually outperform in higher rate backdrops. In addition, management is contemplating a potential spin of its mortgage business (Newrez), which could serve as a catalyst to shares. And lastly, RITM continues to grow in asset management following its acquisition of Sculptor in late 2023 with the potential for more acquisitions or partnerships in the space,' Love noted. The analyst quantifies this stance with an Overweight (i.e., Buy) rating, along with a $14 price target that points toward a one-year gain of 17.25%. Add in the dividend yield, and the return for RITM over the coming year can hit as high as ~26%. All in all, there are 6 recent analyst reviews on record for Rithm Capital and they are all positive – for a unanimous Strong Buy consensus rating. (See RITM stock forecast) To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights.
Yahoo
19-07-2025
- Business
- Yahoo
Where Will AGNC Stock Be in 1 Year?
Key Points AGNC pays a much higher yield than many REITs. But its declining stock price over the past year erased most of those gains. AGNC's dividend is sustainable, but it faces interest rate headwinds. 10 stocks we like better than AGNC Investment Corp. › AGNC Investment (NASDAQ: AGNC), a mortgage real estate investment trust (mREIT), pays a whopping forward dividend yield of 15.7%. It makes those payments on a monthly basis. That might make AGNC seem like a great income-generating alternative to the 10-year Treasury, which only pays a 4.5% yield, or other dividend stocks. But over the past 12 months, AGNC's stock declined 12%. With reinvested dividends, that produced a total return of less than 3%. Should investors accumulate this high-yielding stock as the bulls look the other way? Let's review its business model, near-term challenges, and valuations to decide. How does AGNC make money? AGNC isn't like a typical REIT like Realty Income (NYSE: O) which buys up a lot of properties and rents them out. Instead, it's an mREIT that only originates its own mortgages and buys other mortgage-backed securities (MBSes) instead of physical real estate. It books its interest from those investments as its net profits. But like traditional REITs, mREITs still need to pay out at least 90% of their taxable income as dividends to maintain a lower tax rate. It might seem risky to go all-in on mortgages, but AGNC allocates 89.2% of its $78.9 billion portfolio to agency MBS assets that are backed by Fannie Mae, Freddie Mac, or Ginnie Mae. That government support should shield it from another housing crisis or credit crunch. What happened to AGNC over the past year? Unlike other REITs, which gauge their profitability with their funds from operations (FFO), mREITs report their profits as "net spread and dollar roll income" per share. The net spread is the yield an mREIT earns on its investments minus the costs of funding those assets. It generates its dollar roll income by selling an MBS for the current month while agreeing to a buy it back at a future date. It aims to buy that MBS back at a lower price to book a profit. The other way to measure an mREIT's value is through its tangible net book value per share, which divides the total value of its assets by its number of outstanding shares. Ideally, AGNC's net spread and dollar roll income should be rising along with its tangible net book value. But over the past year, both metrics declined: Metric Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Net spread and dollar roll income per share $0.58 $0.53 $0.43 $0.37 $0.44 Tangible net book value per share $8.84 $8.40 $8.82 $8.41 $8.25 Data source: AGNC. AGNC's profitability usually improves when interest rates decline, because low rates generally reduce its borrowing costs (which are pinned to Treasury yields) for purchasing more MBSes. But over the past year, AGNC's profits and book value still declined even as the Federal Reserve reduced those benchmark rates. That happened because even though the Fed's rate cuts reduced MBS yields, they didn't reduce the borrowing costs for funding those MBS purchases as rapidly. As a result, it needed to take out its loans at higher rates to buy lower-yielding MBSes -- and that pressure reduced its profits. To make matters worse, declining interest rates drove more homeowners to refinance their mortgages at lower rates, which reduced the profitability of its own originated mortgages. What will happen to AGNC over the next year? As that pressure persists, analysts expect AGNC's net spread and dollar roll income per share to drop 12% to $1.66 in 2025, then dip another 2% to $1.63 in 2026. That still easily covers its forward annual dividend rate of $1.44 per share, but its shares could remain under pressure if its MBS yields don't catch up to the Treasury yields and stabilize its profits. That pressure could reduce its book value, drive its shares lower, and offset the gains from its big dividends. If AGNC matches analysts' estimates and still trades at 5 times its forward net spread and dollar roll income per share, its stock price could dip to about $8 by the beginning of 2026. Therefore, AGNC's stock could stay flat or drop slightly lower over the next 12 months -- but its downside potential is limited and its generous monthly dividend looks sustainable. Those strengths might make it a viable investment for income investors, but it certainly won't blast off over the next year. Should you invest $1,000 in AGNC Investment Corp. right now? Before you buy stock in AGNC Investment Corp., consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and AGNC Investment Corp. wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $687,149!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,060,406!* Now, it's worth noting Stock Advisor's total average return is 1,069% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 Leo Sun has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy. Where Will AGNC Stock Be in 1 Year? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
06-07-2025
- Business
- Yahoo
How To Put $100 In Your Retirement Fund Each Month With AGNC Investment Stock
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. AGNC Investment Corp. (NASDAQ:AGNC) is a real estate investment trust that primarily invests in Agency residential mortgage-backed securities. The 52-week range of AGNC Investment stock price was $7.85 to $10.85. AGNC Investment's dividend yield is 15.40%. It paid $1.44 per share in dividends during the last 12 months. Don't Miss: Invest early in CancerVax's breakthrough tech aiming to disrupt a $231B market. . GoSun's Breakthrough Rooftop EV Charger Already Has 2,000+ Units Reserved — The company on April 21 announced its Q1 2025 earnings, posting net spread and dollar roll income of $0.44, beating the consensus estimate of $0.40, as reported by Benzinga. 'Following the April tariff announcement, financial market volatility increased substantially, and Agency MBS spreads to benchmark rates widened. With our conservative leverage profile and ample liquidity at quarter end, AGNC was well-positioned for this instability. Although the widening of Agency MBS spreads drove a modest decline in our tangible book value, our anticipated portfolio returns have increased commensurately with today's wider spread environment. Moreover, at current valuation levels, we believe Agency MBS offer investors a compelling return opportunity on both a levered and unlevered basis,' said CEO Peter Federico. Check out this article by Benzinga for five analysts' insights on AGNC Investment. Trending: Named a TIME Best Invention and Backed by 5,000+ Users, Kara's Air-to-Water Pod Cuts Plastic and Costs — If you want to make $100 per month — $1,200 annually — from AGNC Investment dividends, your investment value needs to be approximately $7,792, which is around 834 shares at $9.34 each. Understanding the dividend yield calculations: When making an estimate, you need two key variables — the desired annual income ($1,200) and the dividend yield (15.40% in this case). So, $1,200 / 0.154 = $7,792 to generate an income of $100 per month. You can calculate the dividend yield by dividing the annual dividend payments by the current price of the stock. The dividend yield can change over time. This is the outcome of fluctuating stock prices and dividend payments on a rolling instance, assume a stock that pays $2 as an annual dividend is priced at $50. Its dividend yield would be $2/$50 = 4%. If the stock price rises to $60, the dividend yield drops to 3.33% ($2/$60). A drop in stock price to $40 will have an inverse effect and increase the dividend yield to 5% ($2/$40). In summary, income-focused investors may find AGNC Investment stock an attractive option for making a steady income of $100 per month by owning 834 shares of stock. Read Next: Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." Image: Shutterstock This article How To Put $100 In Your Retirement Fund Each Month With AGNC Investment Stock originally appeared on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
