AGNC Investment Trades 28% Above Its $8.58 Book Value. What Has to Go Right to Justify It.
AGNC tells investors what it is worth every quarter, so you know exactly how much of a premium you are paying.
Overview
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.
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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Originally published at www.fool.com.