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AGNC Investment vs. Arbor Realty: Which mREIT Offers Better Prospects?
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Key Takeaways
AGNC maintains 91% hedge coverage and $6B in liquidity, supporting income stability and long-term growth.
ABR cut its dividend by 30.3% in May and holds a high payout ratio of 115% amid liquidity concerns.
AGNC trades at a discount to the industry P/E average, while ABR trades at a premium.
Within the mREIT industry, AGNC Investment Corp. (AGNC - Free Report) and Arbor Realty Trust, Inc. (ABR - Free Report) present compelling opportunities for income-focused investors, yet they differ significantly in risk profiles, dividend sustainability and growth trajectory.
Let us delve deeper and analyze various factors at play to decide which is a smarter investment option now.
The Case for AGNC
AGNC Investment adheres to an active portfolio-management policy, which includes re-evaluation and adjustment of its portfolio, as well as hedges amid a varying interest rate and mortgage market environment.
The company is operating in a more defensive position with significant hedge protection due to market volatility. Over the recent quarters, AGNC has made pronounced efforts to reposition its portfolio to offset risks related to interest rates and prepayment uncertainty. As of March 31, 2025, AGNC Investment maintained a significant interest rate hedge position, which covered 91% of the outstanding balance of its Investment Securities Repo, TBA position and other debt. Such prudent asset-selection efforts may offer greater stability of cash flows and bode well for long-term growth.
The Government-sponsored enterprise guarantee for the principal and interest payments makes Agency mortgage-backed securities (MBS) a safer investment choice. Spread widening and mortgage market volatility affected the performance of existing Agency MBS investments. Nonetheless, the long-term investment outlook for the company’s new Agency MBS is favorable. Hence, with $77.9 billion of Agency MBS in its investment portfolio (as of March 31, 2025), AGNC Investment is expected to enjoy attractive risk-adjusted returns within the fixed-income markets.
One of the closely watched aspects of AGNC Investment’s financial profile is its dividend policy. AGNC’s current dividend yield is 15.47%. This is impressive compared with the industry’s average of 11.98%. This attracts investors as it represents a steady income stream. It currently sits at a payout ratio of 81%.
The company enjoys a decent financial position. As of March 31, 2025, AGNC Investment’s liquidity, including unencumbered cash and Agency MBS, was $6 billion. The company’s leverage increased modestly to 7.5X at the end of the first quarter (from 7.2X in the prior quarter). It has a long-term debt of $62 million as of the same date. Hence, given its decent liquidity profile, the capital distribution plan seems sustainable.
The Case for ABR
Arbor Realty primarily focuses on originating and servicing loans for multi-family, single-family and other commercial real estate assets. Housing affordability challenges are expected to decline as mortgage rates come down gradually. With this, mortgage originations are expected to witness improvement. This will lower operational and financial challenges for Arbor Realty, and increase the gain on sale margin and new investment activity.
Like AGNC, Arbor Realty has a record of paying out quarterly dividends. ABR’s current dividend yield is 11.37%, with a payout ratio of 115%. However, in May 2025, the company reduced its dividend by 30.3% to 30 cents per share.
ABR’s weak liquidity position is concerning. As of March 31, 2025, the company had cash and cash equivalents of $508 million, while it had a long-term debt of $4.8 billion. Hence, given a weak liquidity profile, its capital distribution seems unsustainable.
Arbor Realty has a significant exposure to multi-family loans, some of which are underperforming. In the first quarter of 2025, the company foreclosed on seven non-performing loans totaling $196.7 million.
In the past year, AGNC shares have risen 11.7%, while ABR has declined 16.2%. Meanwhile, the industry has grown 5.8%.
Price Performance
Image Source: Zacks Investment Research
In terms of valuation, Arbor Realty is currently trading at a 12-month forward price-to-earnings (P/E) of 8.47X, lower than its five-year median of 8.69X. Alternatively, the AGNC stock is currently trading at a 12-month forward P/E of 5.70X, which is higher than its five-year median of 5.46X.
Price-to-Earnings F12M
Image Source: Zacks Investment Research
Further, AGNC Investment is trading at a discount compared with the industry average of 7.96X, while ABR is trading at a premium. Hence, AGNC is a better choice for value investors.
How Do Estimates Compare for AGNC & ABR?
The Zacks Consensus Estimate for AGNC’s 2025 and 2026 earnings implies a year-over-year decline of 11.2% and 3.9%, respectively. The Zacks Consensus Estimate for AGNC Investment’s 2025 and 2026 earnings has been unchanged over the past 60 days, indicating stability in analyst expectations.
AGNC Estimates Revision Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ABR’s 2025 earnings implies a year-over-year decline of 32.2% while for 2026 it suggests a rise of 12.3%. The Zacks Consensus Estimate for Arbor Realty’s 2025 and 2026 earnings has been revised downward over the past 60 days, suggesting a more cautious outlook from analysts.
ABR Estimates Revision Trend
Image Source: Zacks Investment Research
AGNC or ABR: Which mREIT is Worth Watching?
While both AGNC Investment and Arbor Realty offer attractive dividend yields for income-focused investors, AGNC stands out as the more prudent and sustainable choice in the current environment.
AGNC’s exposure to government-backed Agency MBS, robust interest rate hedging, and strong liquidity position offer stability amid ongoing market volatility. Its higher dividend yield, paired with a more conservative 81% payout ratio, signals that income distributions are likely sustainable.
In contrast, ABR's recent dividend cut, elevated 115% payout ratio and deteriorating asset quality are concerning. Its weaker liquidity and higher debt add to the risk profile. Also, Arbor Realty stock is expensive than AGNC.
For investors looking for stable income with lower risk, AGNC is currently the smarter investment option compared with ABR.
At present, AGNC Investment carries a Zacks Rank #3 (Hold), while Arbor Realty carries a Zacks Rank #5 (Strong Sell).
Image: Bigstock
AGNC Investment vs. Arbor Realty: Which mREIT Offers Better Prospects?
Key Takeaways
Within the mREIT industry, AGNC Investment Corp. (AGNC - Free Report) and Arbor Realty Trust, Inc. (ABR - Free Report) present compelling opportunities for income-focused investors, yet they differ significantly in risk profiles, dividend sustainability and growth trajectory.
Let us delve deeper and analyze various factors at play to decide which is a smarter investment option now.
The Case for AGNC
AGNC Investment adheres to an active portfolio-management policy, which includes re-evaluation and adjustment of its portfolio, as well as hedges amid a varying interest rate and mortgage market environment.
The company is operating in a more defensive position with significant hedge protection due to market volatility. Over the recent quarters, AGNC has made pronounced efforts to reposition its portfolio to offset risks related to interest rates and prepayment uncertainty. As of March 31, 2025, AGNC Investment maintained a significant interest rate hedge position, which covered 91% of the outstanding balance of its Investment Securities Repo, TBA position and other debt. Such prudent asset-selection efforts may offer greater stability of cash flows and bode well for long-term growth.
The Government-sponsored enterprise guarantee for the principal and interest payments makes Agency mortgage-backed securities (MBS) a safer investment choice. Spread widening and mortgage market volatility affected the performance of existing Agency MBS investments. Nonetheless, the long-term investment outlook for the company’s new Agency MBS is favorable. Hence, with $77.9 billion of Agency MBS in its investment portfolio (as of March 31, 2025), AGNC Investment is expected to enjoy attractive risk-adjusted returns within the fixed-income markets.
One of the closely watched aspects of AGNC Investment’s financial profile is its dividend policy. AGNC’s current dividend yield is 15.47%. This is impressive compared with the industry’s average of 11.98%. This attracts investors as it represents a steady income stream. It currently sits at a payout ratio of 81%.
The company enjoys a decent financial position. As of March 31, 2025, AGNC Investment’s liquidity, including unencumbered cash and Agency MBS, was $6 billion. The company’s leverage increased modestly to 7.5X at the end of the first quarter (from 7.2X in the prior quarter). It has a long-term debt of $62 million as of the same date. Hence, given its decent liquidity profile, the capital distribution plan seems sustainable.
The Case for ABR
Arbor Realty primarily focuses on originating and servicing loans for multi-family, single-family and other commercial real estate assets. Housing affordability challenges are expected to decline as mortgage rates come down gradually. With this, mortgage originations are expected to witness improvement. This will lower operational and financial challenges for Arbor Realty, and increase the gain on sale margin and new investment activity.
Like AGNC, Arbor Realty has a record of paying out quarterly dividends. ABR’s current dividend yield is 11.37%, with a payout ratio of 115%. However, in May 2025, the company reduced its dividend by 30.3% to 30 cents per share.
ABR’s weak liquidity position is concerning. As of March 31, 2025, the company had cash and cash equivalents of $508 million, while it had a long-term debt of $4.8 billion. Hence, given a weak liquidity profile, its capital distribution seems unsustainable.
Arbor Realty has a significant exposure to multi-family loans, some of which are underperforming. In the first quarter of 2025, the company foreclosed on seven non-performing loans totaling $196.7 million.
AGNC & ABR: Price Performance & Valuation Analysis
In the past year, AGNC shares have risen 11.7%, while ABR has declined 16.2%. Meanwhile, the industry has grown 5.8%.
Price Performance
In terms of valuation, Arbor Realty is currently trading at a 12-month forward price-to-earnings (P/E) of 8.47X, lower than its five-year median of 8.69X. Alternatively, the AGNC stock is currently trading at a 12-month forward P/E of 5.70X, which is higher than its five-year median of 5.46X.
Price-to-Earnings F12M
Image Source: Zacks Investment Research
Further, AGNC Investment is trading at a discount compared with the industry average of 7.96X, while ABR is trading at a premium. Hence, AGNC is a better choice for value investors.
How Do Estimates Compare for AGNC & ABR?
The Zacks Consensus Estimate for AGNC’s 2025 and 2026 earnings implies a year-over-year decline of 11.2% and 3.9%, respectively. The Zacks Consensus Estimate for AGNC Investment’s 2025 and 2026 earnings has been unchanged over the past 60 days, indicating stability in analyst expectations.
AGNC Estimates Revision Trend
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ABR’s 2025 earnings implies a year-over-year decline of 32.2% while for 2026 it suggests a rise of 12.3%. The Zacks Consensus Estimate for Arbor Realty’s 2025 and 2026 earnings has been revised downward over the past 60 days, suggesting a more cautious outlook from analysts.
ABR Estimates Revision Trend
Image Source: Zacks Investment Research
AGNC or ABR: Which mREIT is Worth Watching?
While both AGNC Investment and Arbor Realty offer attractive dividend yields for income-focused investors, AGNC stands out as the more prudent and sustainable choice in the current environment.
AGNC’s exposure to government-backed Agency MBS, robust interest rate hedging, and strong liquidity position offer stability amid ongoing market volatility. Its higher dividend yield, paired with a more conservative 81% payout ratio, signals that income distributions are likely sustainable.
In contrast, ABR's recent dividend cut, elevated 115% payout ratio and deteriorating asset quality are concerning. Its weaker liquidity and higher debt add to the risk profile. Also, Arbor Realty stock is expensive than AGNC.
For investors looking for stable income with lower risk, AGNC is currently the smarter investment option compared with ABR.
At present, AGNC Investment carries a Zacks Rank #3 (Hold), while Arbor Realty carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.