We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Mortgage Rates Declining: How to Approach AGNC Investment Stock Now?
Read MoreHide Full Article
Key Takeaways
Mortgage rate declines and Fed cuts are boosting AGNC's loan demand and reducing funding costs.
AGNC offers a 15.43% dividend yield and has a $1B stock repurchase plan active through 2026.
Despite gains and MBS strength, AGNC trades at a premium valuation versus industry and peers.
AGNC Investment Inc.'s (AGNC - Free Report) performance and prospects are significantly influenced by mortgage rates. Mortgage rates have been witnessing a decline lately. Per a Freddie Mac report, the average rate on a 30-year fixed-rate mortgage was 6.84% as of June 12, 2025, down from 6.95% in the same week a year ago.
Housing affordability challenges are expected to decline with lower mortgage rates. With rates trending lower and balanced supply/affordability playing out in the mortgage market, loan demand is witnessing an increase. With this turnaround, mortgage originations and refinancing index are seeing a positive trend. This will likely reduce operational and financial challenges for mREITs like AGNC, and increase the gain on sale margin and new investment activity.
The Federal Reserve's interest rate cuts by 100 basis points in 2024 have helped stabilize the company's funding costs. This will also keep easing earnings pressure for AGNC Investment, which will help the company increase its dividend payout.
Given such positive developments, many investors must be wondering whether to park their cash in the AGNC stock. But is now the right time to invest? To answer this, it is essential to delve into the details and evaluate various factors at play.
AGNC & Attractive Payout
One of the closely watched aspects of AGNC Investment’s financial profile is its dividend policy.
AGNC’s current dividend yield is 15.43%. This is impressive compared with the industry’s average of 11.68%. This attracts investors as it represents a steady income stream. It currently sits at a payout ratio of 81%.
AGNC Investment's peers Annaly Capital Management (NLY - Free Report) and Arbor Realty Trust (ABR - Free Report) are also providing investors with solid dividend options. Annaly Capital Management has an annual dividend yield of 14.6%, whereas ABR has a dividend yield of 11.6%.
Dividends aside, AGNC has a share repurchase plan in place. In October 2024, the company’s board of directors terminated the existing stock repurchase plan and replaced it with a new plan authorizing it to repurchase up to $1 billion of common stock through Dec. 31, 2026. As of March 31, 2025, full authorization was available for repurchase.
AGNC Investment & Agency MBS Outlook
AGNC has maintained its focus on agency mortgage-backed securities (RMBS), a strategy that has positioned it as a strong player in this specialized market segment.
AGNC Investment primarily focuses on leveraged investments in Agency RMBS, including residential mortgage pass-through securities and collateralized mortgage obligations. A U.S. Government agency or a U.S. Government-sponsored enterprise guarantees the principal and interest payments for such investments.
The fundamental outlook for fixed income, particularly agency MBS assets, has shown signs of improvement lately. However, following the April tariff announcement, financial market volatility increased substantially, and Agency MBS spreads to benchmark rates widened.
Nonetheless, with its conservative leverage profile and ample liquidity, AGNC was well-positioned for this instability. Given this, AGNC Investment generated an economic return of 2.4% in the first quarter of 2025, driven by the company’s compelling monthly dividend.
Moreover, management believes that Agency MBS offers investors a compelling return opportunity for AGNC. Although the market is extremely competitive, the company's focus on agency MBS puts it in a position to possibly profit from favorable trends. However, execution will be crucial to achieving these advantages.
AGNC Price Performance
AGNC Investment shares have gained 8.1% in the past six months compared with the industry’s rise of 3.2%. Meanwhile, AGNC peers Annaly Capital Management has gained 9.3% while Arbor Realty has declined 19.7%, over the past six months.
Price Performance
Image Source: Zacks Investment Research
How to Approach AGNC Stock Now?
Given relatively lower mortgage rates, the origination and refinancing activities will increase in the upcoming period. This will support AGNC’s financials in the upcoming period. With expected interest rate cuts in 2025, AGNC's net interest spread and book value are expected to get a boost. That could be a strong tailwind for the company in the upcoming period.
Sales Estimates
Image Source: Zacks Investment Research
However, from a valuation standpoint, AGNC Investment appears expensive relative to the industry. The company is currently trading at a premium with a forward 12-month price-to-tangible book (P/TB) multiple of 1.09X, above the industry average of 0.96X.
Price-to-Tangible Book TTM
Image Source: Zacks Investment Research
AGNC Investment is also trading at a premium compared with Annaly Capital Management and Arbor Realty, which have forward 12-month P/TB of 0.89X and 0.98X, respectively.
Also, volatility in the mortgage market, unfavorable changes in the form of the yield curve, and deterioration of the generic financial conditions may affect AGNC's performance in the future. The company also has a track of lowering dividends during stressful times.
Considering the pros and cons of AGNC, we may conclude that investors should refrain from rushing to buy the stock right now. They should analyze the upcoming interest rate changes and the mortgage market for a more appropriate entry point. Its premium valuation also warrants caution.
Image: Bigstock
Mortgage Rates Declining: How to Approach AGNC Investment Stock Now?
Key Takeaways
AGNC Investment Inc.'s (AGNC - Free Report) performance and prospects are significantly influenced by mortgage rates. Mortgage rates have been witnessing a decline lately. Per a Freddie Mac report, the average rate on a 30-year fixed-rate mortgage was 6.84% as of June 12, 2025, down from 6.95% in the same week a year ago.
Housing affordability challenges are expected to decline with lower mortgage rates. With rates trending lower and balanced supply/affordability playing out in the mortgage market, loan demand is witnessing an increase. With this turnaround, mortgage originations and refinancing index are seeing a positive trend. This will likely reduce operational and financial challenges for mREITs like AGNC, and increase the gain on sale margin and new investment activity.
The Federal Reserve's interest rate cuts by 100 basis points in 2024 have helped stabilize the company's funding costs. This will also keep easing earnings pressure for AGNC Investment, which will help the company increase its dividend payout.
Given such positive developments, many investors must be wondering whether to park their cash in the AGNC stock. But is now the right time to invest? To answer this, it is essential to delve into the details and evaluate various factors at play.
AGNC & Attractive Payout
One of the closely watched aspects of AGNC Investment’s financial profile is its dividend policy.
AGNC’s current dividend yield is 15.43%. This is impressive compared with the industry’s average of 11.68%. This attracts investors as it represents a steady income stream. It currently sits at a payout ratio of 81%.
AGNC Investment Corp. Dividend Yield (TTM)
AGNC Investment Corp. dividend-yield-ttm | AGNC Investment Corp. Quote
AGNC Investment's peers Annaly Capital Management (NLY - Free Report) and Arbor Realty Trust (ABR - Free Report) are also providing investors with solid dividend options. Annaly Capital Management has an annual dividend yield of 14.6%, whereas ABR has a dividend yield of 11.6%.
Dividends aside, AGNC has a share repurchase plan in place. In October 2024, the company’s board of directors terminated the existing stock repurchase plan and replaced it with a new plan authorizing it to repurchase up to $1 billion of common stock through Dec. 31, 2026. As of March 31, 2025, full authorization was available for repurchase.
AGNC Investment & Agency MBS Outlook
AGNC has maintained its focus on agency mortgage-backed securities (RMBS), a strategy that has positioned it as a strong player in this specialized market segment.
AGNC Investment primarily focuses on leveraged investments in Agency RMBS, including residential mortgage pass-through securities and collateralized mortgage obligations. A U.S. Government agency or a U.S. Government-sponsored enterprise guarantees the principal and interest payments for such investments.
The fundamental outlook for fixed income, particularly agency MBS assets, has shown signs of improvement lately. However, following the April tariff announcement, financial market volatility increased substantially, and Agency MBS spreads to benchmark rates widened.
Nonetheless, with its conservative leverage profile and ample liquidity, AGNC was well-positioned for this instability. Given this, AGNC Investment generated an economic return of 2.4% in the first quarter of 2025, driven by the company’s compelling monthly dividend.
Moreover, management believes that Agency MBS offers investors a compelling return opportunity for AGNC. Although the market is extremely competitive, the company's focus on agency MBS puts it in a position to possibly profit from favorable trends. However, execution will be crucial to achieving these advantages.
AGNC Price Performance
AGNC Investment shares have gained 8.1% in the past six months compared with the industry’s rise of 3.2%. Meanwhile, AGNC peers Annaly Capital Management has gained 9.3% while Arbor Realty has declined 19.7%, over the past six months.
Price Performance
Image Source: Zacks Investment Research
How to Approach AGNC Stock Now?
Given relatively lower mortgage rates, the origination and refinancing activities will increase in the upcoming period. This will support AGNC’s financials in the upcoming period. With expected interest rate cuts in 2025, AGNC's net interest spread and book value are expected to get a boost. That could be a strong tailwind for the company in the upcoming period.
Sales Estimates
Image Source: Zacks Investment Research
However, from a valuation standpoint, AGNC Investment appears expensive relative to the industry. The company is currently trading at a premium with a forward 12-month price-to-tangible book (P/TB) multiple of 1.09X, above the industry average of 0.96X.
Price-to-Tangible Book TTM
Image Source: Zacks Investment Research
AGNC Investment is also trading at a premium compared with Annaly Capital Management and Arbor Realty, which have forward 12-month P/TB of 0.89X and 0.98X, respectively.
Also, volatility in the mortgage market, unfavorable changes in the form of the yield curve, and deterioration of the generic financial conditions may affect AGNC's performance in the future. The company also has a track of lowering dividends during stressful times.
Considering the pros and cons of AGNC, we may conclude that investors should refrain from rushing to buy the stock right now. They should analyze the upcoming interest rate changes and the mortgage market for a more appropriate entry point. Its premium valuation also warrants caution.
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.