AGNC Investment’s 14% Dividend Yield: A Trap for Income Investors?

AGNC Investment Corp. (AGNC) commands attention with its staggering 14% dividend yield—nearly 12 times the S&P 500's payout and quadruple the average REIT yield. Yet this mortgage REIT operates more like a Leveraged bond fund than a traditional property owner, raising red flags for yield-chasing investors.

The company's Core business involves purchasing pooled mortgage securities and amplifying returns through borrowing—a strategy that exposes shareholders to interest rate volatility and credit risk. Unlike physical-asset REITs, AGNC's tangible net book value per share fluctuates with its mortgage portfolio's mark-to-market pricing, creating a fundamentally different risk profile.

"Favorable long-term stockholder returns with a substantial yield component" remains AGNC's stated mission. But history shows such ultra-high yields often signal underlying distress rather than opportunity—a cautionary tale in today's uncertain rate environment.