Is AGNC Investment Stock a Buy Now?

Reuben Gregg Brewer, The Motley Fool

Sat, May 24, 2025, 3:23 PM 5 min read

• AGNC Investment has a massive 15% dividend yield.

• The mortgage REIT is a unique investment that requires a nuanced understanding of its lofty yield.

• Some investors might find it compelling, but most dividend investors should tread with caution.

• 10 stocks we like better than AGNC Investment Corp. ›

AGNC Investment (NASDAQ: AGNC) always seems to pop up on screens for high-yield stocks. In fact, the mortgage real estate investment trust (REIT) has had a dividend yield above 10% for the vast majority of its existence.

That sounds enticing, but there are important nuances here. Before you buy this stock, you need to have a deeper understanding of what it does and why.

As noted, AGNC Investment is a mortgage REIT, a subsector of the REIT category that operates in a completely different fashion from property-owning REITs.

A property-owning REIT buys physical properties and leases them out to tenants, which is easy to understand because it is what you would do with a rental property. A mortgage REIT like AGNC buys mortgages that have been pooled together into bond-like securities. In many ways, mortgage REITs are more like mutual funds than operating companies.

Essentially, the value of AGNC is the value of its mortgage securities portfolio. These bond-like investments trade all day long and are affected by interest rates, property market trends, and mortgage repayment trends, among other factors. The REIT is simply trying to make the difference between the interest it earns and its costs, which notably includes the interest costs associated with leverage. There are a lot of moving parts, and it would be difficult for an investor to closely track what is going on inside of AGNC.

It is a fairly complex business, and the real problem here comes from an odd dichotomy. AGNC has a massive 15%-plus dividend yield right now, which leads many investors to view it as an income investment. But the company clearly states that its goal is total return. And total return assumes dividend reinvestment.

This is where understanding what you own becomes vital. The company lives up to its goal of producing good total returns over time. As the chart below highlights, this mortgage REIT has largely kept pace with the total return of the S&P 500 index (SNPINDEX: ^GSPC) since its inception.

In fact, over some periods, AGNC has strongly outperformed the S&P 500. If it was included as part of a diversified asset allocation model, an investor would likely be pleased with this selection.