How Safe Is AGNC's 13% Dividend Right Now?
AGNC Investment Corp. (NASDAQ: AGNC), one of the largest mortgage real estate investment trusts (mREITs) in America, pays a massive forward dividend yield of 13.1%. Is that high yield a bright red flag, or is AGNC actually a safe income play for long-term investors?
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Unlike equity REITs, which buy properties and lease them out to generate income, mREITs buy mortgages and mortgage-backed securities (MBS) to collect interest. To insulate itself from another credit crunch or housing market crash, AGNC allocates 89% of its $94.7 billion portfolio to Agency MBS assets backed by Fannie Mae, Freddie Mac, or Ginnie Mae. REITs and mREITs also must pay out at least 90% of their taxable income as dividends to maintain a lower tax rate.
Source Fool.com
