AGNC Investment Faces Dividend Concerns Amid Profit Decline

AGNC Investment, known for its high dividend yield, faces challenges as its net spread income drops. Analysts predict further declines in income per share, raising concerns about dividend sustainability.

Date: 25-03-2025

AI Rating: 4

Profit Challenges Ahead for AGNC Investment

AGNC Investment (NASDAQ: AGNC), a mortgage real estate investment trust (mREIT), has been attracting dividend investors due to its significant 14% yield. However, the report highlights that AGNC's profitability is under pressure as its net spread and dollar roll income per share decreased by 28% to $1.88.

This decline is attributed to recent interest rate cuts by the Federal Reserve, impacting the company's earnings. Analysts forecast that AGNC's income will continue to decrease, predicting a further reduction of 15% to $1.60 per share in 2025. This expected decline raises concerns about the sustainability of its $1.44 dividends per share, which it pays monthly. While the current dividend seems sustainable, future earnings may not support it, leading to apprehension among investors.

Comparative Analysis of Realty Income and Vici Properties

In contrast, Realty Income (NYSE: O) and Vici Properties (NYSE: VICI) are suggested as more stable alternatives due to their portfolio strategies. Realty Income has a solid track record of consistent occupancy rates and delivers a dividend backed by its reliable rental income. Its adjusted funds from operations (AFFO) demonstrate growth over the years, with a forecasted increase for 2025 being maintained.

Vici Properties shows a strong performance with a perfect occupancy rate since its IPO and a steady growth of AFFO per share, indicating its capability to sustain dividends. Investors looking for income may find Realty Income and Vici Properties more appealing due to their robust structures compared to AGNC's current challenges.

Stocks: AGNC O VICI