High Dividend Yields Amid Risks for IIPR and AGNC Investors

Investors should eye Innovative Industrial Properties and AGNC Investment for their impressive dividend yields of 10% and 13%, respectively. However, high yields come with risks that investors should thoroughly evaluate before diving in.

Date: 02-03-2025

AI Rating: 5

Dividend Yields
Innovative Industrial Properties (IIPR) offers a high dividend yield of 10%, while AGNC Investment presents an even higher 13%. These yields are attractive to dividend investors, but they come with inherent risks that need careful consideration.

Understanding the Risks
Investors should acknowledge that high dividend yields can be indicative of underlying problems. Innovative Industrial is facing tenant issues due to the challenging environment in the marijuana sector, affecting its income stability. Despite having a relatively strong balance sheet with a low debt-to-equity ratio of 0.15, the company’s funds from operations (FFO) payout ratio was approximately 86% in the last quarter. This is a concerning figure, especially since it is projected to rise over 90% in 2025, raising questions about the sustainability of its dividend in the future.

AGNC Investment's Dividend
On the other hand, AGNC Investment's dividend has been declining for several years, reflecting its troubled stock price trajectory. While the stock has historically paid out more in dividends than it has lost in value, it may present significant risk to income investors, as a falling dividend and stock price do not align with the typical goals of dividend investing.

Investment Implications
Investors considering these high-yield REITs must assess their risk tolerance. Innovative Industrial's strong dividend history might attract more aggressive investors willing to navigate the shaky waters of the marijuana market, whereas AGNC Investment appears less appealing for income-focused investors due to its declining performance.

Stocks: IIPR AGNC