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A high return is not the only thing you should take into account when determining a good income share. Some high-yield stocks are value traps that lure less-savvy investors into troubled companies. This explains why it’s important to do thorough research before deciding to buy a dividend stock.
To help you stay on top of your investing game, we’ve done some analysis AGNC Investment Corp (NASDAQ:AGNC) high yield to determine if it’s a good income stock or a potential value trap. AGNC is the second largest mortgage REIT in the world, with a market capitalization of $7.022 billion. The REIT invests in institutional-backed residential mortgage-backed securities and claims its goal is to generate superior long-term returns for shareholders with a substantial return component.
AGNC currently offers an annualized dividend yield of 14.91%, more than 10x the S&P 500’s dividend yield of 1.47%. To determine if these returns are sustainable, we looked at the REIT’s dividend payment history and fundamentals. AGNC has a shaky dividend history, with rapid ups and downs over the past decade.
Furthermore, the shares have shown significant volatility, down 50% in the past five years. This decline is a key factor in maintaining high returns, despite the decline in dividends. AGNC’s book value per share has also fallen significantly, from $23.93 in 2013 to just $8.84 per share at the end of the first quarter of 2024. This decline in book value is a clear indication of a weakening financial position and a inability to maintain its dividend payments. , highlighting the potential risks of high-yield stocks.
While AGNC may be showing signs of recovery due to falling interest rates, the company still has a significant journey ahead of it to support its high-yield dividends. Its volatility further underlines the need for caution, making it less favorable for income investing.
There are better opportunities in the field of high returns
The current high interest rate environment has created an incredible opportunity for income-seeking investors to earn huge returns, but not through dividend stocks… Certain private market real estate investments offer retail investors the opportunity to take advantage of these high-yield investments. possibilities and Benzinga has identified some of the most attractive options for you.
For example, the Jeff Bezos-backed investment platform just launched its own investment platform Private Debt Fund, which provides access to a pool of short-term loans backed by residential real estate, with a net annual return of 7% to 9% paid out to investors monthly. The best part? Unlike other private credit funds, this one has a minimum investment of just $100.
Don’t miss this opportunity to take advantage of high-yield investments while interest rates are high. See Benzinga’s favorite high-yield deals.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
This article Is AGNC Investment Corp’s 14.9% Dividend a Yield Trap? originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
