AGNC

AGNC Investment may have sufficient coverage now for its 16.7% dividend, but a continuation of current interest-rate trends could bode poorly for the mortgage rate. Annaly Capital Management has similar risks, but recent upbeat statements from management suggest a possible path to steadier payouts and stronger total returns.

Four stocks are paying out billions in dividends that their cash flows can barely support, and the gap between what investors expect and what the business can actually deliver keeps widening.

Mortgage rates approaching twenty-year highs have frozen existing home sales near Great Financial Crisis lows. Homeowners with four percent mortgages remain locked in place, severely constraining new housing supply. Government-sponsored enterprise guarantees eliminate credit default risk from agency mortgage-backed securities.

We're at the halfway point of another surprisingly strong REIT earnings season, with property fundamentals continuing to improve despite a materially tougher interest rate and capital market backdrop. Among 52 equity REITs providing full-year FFO guidance, 44 raised their outlooks (85%), six maintained guidance, and just two lowered (4%) their FFO outlook. REITs have significantly outperformed during earnings season, with the Equity REIT Index gaining nearly 4% during this stretch versus a -3% decline for the S&P 500.

AGNC Investment (AGNC) has been one of the stocks most watched by Zacks.com users lately. So, it is worth exploring what lies ahead for the stock.

Dividend-paying stocks, especially 'LoPrice/HiYield Dividend Dogs,' are positioned for strong total returns as market sentiment shifts from growth to income. Top ten LoPrice/HiYield Dogs are projected to deliver average net gains of 51.9% by October 2027, with some individual names like BXMT estimated at 76.17%. Twenty-nine of forty-two featured stocks show 'safer' dividends, supported by positive free cash flow, but thirteen rely on borrowed funds for payouts.

AGNC's stock has lost half its value since its 2008 IPO. But its dividends easily offset that decline, yielding a decent total return.

A 16% yield sounds like a retirement dream until you look at what is quietly happening to the principal underneath it. Five popular income stocks are flashing warning signs that most investors only notice after the cut.

I downgraded AGNC Investment to 'Hold' earlier this month due to the Federal Reserve's pivot toward interest rate increases. AGNC's book value and net interest spread are under pressure: the mortgage REIT's book value crashed 17% Q/Q. AGNC still trades at a 16% premium to book value, despite significant risk of further rate increases and MBS values falling in a higher-rate world.

AGNC sends shareholders a check every single month and yields more than most investors see in a year, but last quarter book value fell faster than the dividends arrived. Here is what the math actually looks like.