Is AGNC Investment Corp. a Buy While It's Down?
AGNC Investment Corp. (NASDAQ: AGNC) has a dividend yield over 10% today with the stock having lost about a quarter of its value in 2020. Investors looking for yield have probably seen the name pop up on their stock screens. However, is the fat yield a buying opportunity, or is the steep price decline related to real, long-term troubles? Here's a quick look at the company to help you figure it out.
The first thing investors need to understand is that AGNC is a mortgage real estate investment trust (REIT). There are two big takeaways here.
First, REITs are designed to pass income on to investors. In fact, in order to maintain the REIT status and avoid corporate level taxation, these companies have to pass at least 90% of their taxable earnings through to shareholders as dividends. (Since taxes were avoided at the corporate level, investors must treat the dividends as regular income.)
Source Fool.com
