Is AGNC Still a Reliable Income Pick After Its Latest Earnings?
This mREIT isn't a high-yield trap, but it also isn't a reliable long-term investment.
Is AGNC Still a Reliable Income Pick After Its Latest Earnings?
Overview
AGNC (NASDAQ: AGNC), one of the largest mortgage real estate investment trusts (mREITs) in America, might seem like a tempting income play with a massive forward yield of 13.6%. But is that dividend sustainable, or is it a high-yield trap? Let's review how AGNC funds its dividends, and whether its latest earnings report makes it a less reliable income investment.
AGNC buys mortgages and mortgage-backed securities (MBS), collects interest from those investments, and distributes at least 90% of its taxable income to its investors. It allocates 89% of its $94.7 billion portfolio to Agency MBS assets (backed by Fannie Mae, Freddie Mac, or Ginnie Mae), which shields it from another housing market crash.
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Originally published at www.fool.com.
