AGNC Investment Corp's Dividend Analysis
Assessing the Sustainability of AGNC Investment Corp's Dividend
AGNC Investment Corp (NASDAQ:AGNC) recently announced a dividend of $0.12 per share, payable on 2024-02-09, with the ex-dividend date set for 2024-01-30. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into AGNC Investment Corp's dividend performance and assess its sustainability.
What Does AGNC Investment Corp Do?
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AGNC Investment Corp is a real estate investment trust that invests in agency residential mortgage-backed securities. The firm's asset portfolio is comprised of residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by a U.S. Government-sponsored enterprise, such as the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, or by a U.S. Government agency, such as the Government National Mortgage Association. It also invests in other types of mortgage and mortgage-related residential and commercial mortgage-backed securities or other investments in or related to, the housing, mortgage or real estate markets.
A Glimpse at AGNC Investment Corp's Dividend History
AGNC Investment Corp has maintained a consistent dividend payment record since 2008. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down AGNC Investment Corp's Dividend Yield and Growth
As of today, AGNC Investment Corp currently has a 12-month trailing dividend yield of 14.67% and a 12-month forward dividend yield of 14.67%. This suggests an expectation of same dividend payments over the next 12 months. Over the past three years, AGNC Investment Corp's annual dividend growth rate was -10.40%. Extended to a five-year horizon, this rate increased to -9.50% per year. And over the past decade, AGNC Investment Corp's annual dividends per share growth rate stands at -10.40%.
Based on AGNC Investment Corp's dividend yield and five-year growth rate, the 5-year yield on cost of AGNC Investment Corp stock as of today is approximately 8.91%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, AGNC Investment Corp's dividend payout ratio is 28.80, which may suggest that the company's dividend may not be sustainable.
AGNC Investment Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks AGNC Investment Corp's profitability 3 out of 10 as of 2023-12-31, suggesting the dividend may not be sustainable. The company has reported net profit in 7 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. AGNC Investment Corp's growth rank of 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Next Steps
In conclusion, AGNC Investment Corp's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics present a mixed picture for value investors. While the high dividend yield is attractive, the negative growth rates and low profitability and growth ranks raise concerns about the long-term sustainability of such yields. Investors should consider these factors in their overall analysis of AGNC Investment Corp as a potential income-generating investment. For those seeking to explore further, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
