Key Points
AGNC's October dividend record date just passed.
It will likely pay the same rate in November.
The record date for AGNC Investment's (NASDAQ:AGNC) October dividend just passed at the end of September. However, you don't need to worry, as I expect it will pay another dividend in November. The mortgage-focused real estate investment trust (REIT) has paid the same monthly rate of $0.12 per share since May 2020.
Here's how much investing $1,000 in the high-yielding monthly dividend stock right now would start generating in November.
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A lucrative monthly income stream
AGNC Investment's stock price was recently around $9.50 a share. At that price point, a $1,000 investment would purchase 105 shares. Those shares would generate $12.60 of dividend income each month ($151.20 per year). That's a 15.2% yield on your investment, over 10 times more than you'd collect by investing $1,000 into an S&P 500 Index fund at its low 1% yield.
The trade-off for that much higher income rate is a higher risk profile. AGNC Investment's stock price has lost half of its value since its IPO in 2008. On a more positive note, its dividend has more than offset the decline in its stock price. That's despite a significant decline in that payout from its peak.
The mortgage REIT's payout has declined over the years as interest rate fluctuations have affected its earnings. Rates are currently rising, which could be a net positive for its business. It means fewer people will refinance their mortgages into lower-rate loans, and new investments will carry higher rates. However, the trade-off is that its borrowing rates will rise. Still, as long as AGNC's returns exceed its costs (which has been the case for the past few years), its high-yielding dividend remains aligned with the economics of its business.
Investors just need to keep in mind that this is a higher-risk way to generate a higher-yielding monthly income stream.
Matt DiLallo 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.