Why Is AGNC Investment's Dividend So High?
Income investors tend to flock to high-yield stocks, lured in by their huge dividend payments. Far too often, though, the risks of these investments outweigh the potential rewards. When it comes to AGNC Investment's (NASDAQ: AGNC) massive 12.6% yield, most investors should tread with caution, and conservative ones should probably avoid it. Here's why.
A property-owning real estate investment trust (REIT) is fairly simple to understand. Such companies buy physical properties, lease them to tenants, and collect fairly steady streams of rent. At least 90% of any REIT's taxable income must be passed on to investors via dividends each year.
But mortgage REITs don't function like this.
Source Fool.com
