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American Capital Agency Corp. Message Board

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  • aapl1000 aapl1000 Jan 7, 2013 11:58 PM Flag

    AGNCP - What are the disadvantages?

    The big disadvantage is that you can get a much better yield investing in AGNC instead of AGNCP. But, like people have said, if AGNC's earnings deteriorate, you have less risk of a dividend cut or worse holding AGNCP. However, if things go horribly bad with the business, the preferred investors could still take substantial losses. For example, back in the Financial Crisis of 2008, investors who owned what they thought was safe securities (bank issued preferred stock) took heavy losses. I would expect that AGNCP stock would follow AGNC's stock price down if things went horribly bad so you are getting a small amount of safety in AGNCP and giving up about 6% in yield.

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