Agnc investment(NASDAQ: AGNC) is a very complicated company, but many investors are still lured in an amazing major dividend yield of 14%. Before you buy this mortgage trust in real estate investment (Reit), you need to care a few things carefully. The price you pay is one of these things.
Before you get to the price you pay for an agnc investment, it is important to solve dividend yield. AND S & P 500 The index gives a scarce 1.2%and the average reit gives approximately 3.9%. Because of this, AGNC’s yield will look powerful for investors who are trying to maximize the income they generate from their portfolio.
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Real estate investments are designed to convey revenue to investors through dividends. So high yields are quite common in the sector. However, 14% is not a common figure and emphasizes additional risks that investors take over when buying this reit. From a dividend perspective, this risk is perfectly stood out in the lower chart.
Most investors in dividend want to create a reliable and even growing flow of revenue from their portfolio. AGNC, after a rapid increase in dividends, has seen for years fall constantly. The price of the shares followed the lower dividends.
This is not what most dividend investors have in mind when they buy dividend. This chart is not as bad as it looks because AGNC has paid a lot more in dividend than he lost in the price of shares from his initial public offer (IPO). This resulted in an attractive total yield (which presupposes a re -investment of dividends). But if investors had spent these dividends along the way, they would still end up with fewer income and less capital.
If you want to make a living from the dividends your portfolio rejects, you need to walk very carefully with the AGNC investment. But what about these prices is a stock of $ 8.41?
As a mortgage reit, the agnc investment has a portfolio of mortgage that has been transferred to securities similar to bonds. The value of that portfolio is what the company is worth.
The management provides this figure quarterly, marking it tangible net book value per share. At the end of the fourth quarter 2024, the tangible accounting value of the AGNC was $ 8.41 per share. That number is neither good nor bad; It is simply a portfolio value at a particular point at a particular point.
Mortical securities in the AGNC portfolio trade all day, so its tangible net book value changes daily. Many factors, such as interest rates, ratio of the repayment of the mortgage and the dynamics of the living space market can be affected.
But ultimately, the market decides which value papers are valid at any time. If the price of the Reit shares is above its tangible net book value, then investors buy the company for more than it would be worth liquidated. Or, to say another way, they overwhelm.
AGCNC CINISOR CEO Pointed out Bernic Bell This edition during the Conference Call earnings in the third quarter of 2024: “… In the third quarter we issued $ 781 million in common capital through our market program. A significant increase in ATM issuance was in line with a significant premium price on book Our usual stocks throughout the quarter have encouraged the collection of material bookkeeping values in favor of our usual shareholders. “
The “Accession” mentioned by Bell because each penny is above the tangible net book value that investors paid for these newly issued shares favorable for the company. It allows the administration to buy securities above and above what could be purchased at the current market rate for the mortgage securities he owns, which is his tangible net book value per share.
If you do not have a very strong conviction that the AGNC -tangible net book value will move more, paying above that figure means that you are overwhelming supplies. Keep in mind that the tangible net book value per share in the fourth quarter 2024 fell $ 0.41, which is a drop of 4.6%.
If you have the bias of the value, the answer here is very clear: do not pay the tangible net book value for AGNC. It would be better for you to wait until Reit is traded under that figure. The only way to buy it for more than its tangible net book value is if you expected that value to increase.
And then here you have to consider the yield of dividends and the history of dividends. This is a very complex investment that most investors, especially conservative dividend investors, will probably be better avoided.
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Reuben Gregg Brewer There is no position in any of the shares mentioned. Motley Fool has no position in any of the shares mentioned. Motley Fool has disclosure rules.
