Key Points
AGNC Investment is a mortgage REIT, and its portfolio of mortgage securities is its primary asset.
The company reports the value of its portfolio every quarter, making it a data point you shouldn't overlook in a chase for yield.
The biggest selling point for AGNC Investment (NASDAQ: AGNC) is usually its huge yield. As of this writing, the yield is an ultra-high 13.5%. To put that yield into perspective, the S&P 500 index (SNPINDEX: ^GSPC) yields only about 1%. Before you buy for the yield, you need to consider another company statistic: Tangible net book value per share.
AGNC: Know what you own
Sometimes, in the search for yield, dividend investors overlook important risks. AGNC's 13.5% yield is incredibly enticing, given today's low-yield environment. However, if you look back at the company's dividend history, you'll see it is highly volatile, with long periods of dividend decline. The stock price tends to track the dividend, keeping the yield high. It isn't a great investment choice if you are looking for reliable and growing dividends over time to support spending needs in retirement.
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That said, AGNC is a well-respected business. But you have to understand what it does. As a mortgage real estate investment trust (REIT), it buys mortgages that have been pooled into bond-like securities. The company's value is basically the value of its portfolio, and it reports that figure every quarter. At the end of the second quarter of 2026, the company's tangible net book value per share was $8.58. That means that buying at recent prices near $10.65 is a roughly 25% premium over that value.
For that premium to be worth it, a lot has to go right for the mortgage REIT.
Key factors to watch with AGNC Investment
The big factor for AGNC's dividend is its net spread income, which came in at $0.40 per share in the second quarter. That is the income available to pay the $0.36-per-share quarterly dividend (paid in monthly installments of $0.12). So, right now, the dividend looks well covered.
Another key factor is the net tangible book value, which increased by $0.20 per share in the quarter, or roughly 2.4%. Clearly, a rising book value is preferable to a falling one, as it indicates the portfolio's value is increasing. Interest rates play a big role in the trends there, with bonds moving in the opposite direction to rates. So interest rates are a key external factor to monitor.
Complicating this is AGNC's use of leverage, which increases the impact of price changes in its portfolio. Leverage stood at 7.4x at the end of the first quarter, down from 7.6x a year ago. That's a directionally positive sign, though the change isn't huge. The concern is that inflation is running hot, which could lead to higher interest rates and a decline in the portfolio's value. Higher rates would also increase the company's borrowing costs. Both would reduce the safety of the dividend.
Probably not a great fit for most dividend investors
While AGNC's dividend looks secure for now, the uncertain market and rate environment bring risks. Most dividend investors would probably be better off with a different income stock if dividend reliability is an important investment criterion. Notably, even if the company performs well as a business, it would take only a negative shift in investor sentiment for the stock price to retreat toward the tangible net book value. And if the trends in the above statistics turn negative, the stock would likely reprice quickly to a lower level.
Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.