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AGNC Investment Gains 14.2% in 6 Months: Should Investors Buy It Now?
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Key Takeaways
AGNC shares rose 14.2% in six months, beating the industry's 2.3% gain and topping the S&P 500's rise.
Lower mortgage rates, Fed cuts, and active hedging are supporting AGNC's earnings and portfolio stability.
AGNC trades above industry P/B levels, suggesting limited upside despite decent liquidity and a high yield.
AGNC Investment Corporation (AGNC - Free Report) shares have gained 14.2% in the past six months, outperforming the industry’s 2.3% growth and the S&P 500 Index’s 11.8% rise. Meanwhile, the company’s peers, Annaly Capital Management (NLY - Free Report) shares have risen 14.8%, whereas shares of Starwood Property Trust, Inc. (STWD - Free Report) have plunged 13.1% in the same time frame.
Six-Month Price Performance
Image Source: Zacks Investment Research
Despite recent strength in its share price, does AGNC stock still have room for further upside? Let’s find out.
What’s Aiding AGNC’s Performance?
Easing Mortgage Rates: AGNC Investment’s performance remains closely tied to movements in mortgage rates, which have been trending lower. Per Freddie Mac report, the average rate on a 30-year fixed-rate mortgage was 6.15% as of Dec. 31, 2025, down from last week, when it averaged 6.18%. A year ago, at this time, the rates averaged 6.91%.
Lower mortgage rates are gradually easing housing affordability challenges and supporting improved loan demand. As refinancing and mortgage origination activity gains momentum, operating conditions for mortgage REITs such as AGNC, Annaly and Starwood Property are expected to improve, leading to higher gain-on-sale margins and increased new investment activity.
At the same time, the Federal Reserve reduced interest rates by 75 basis points in 2025, following a 100-basis-point cut in 2024, and has indicated the possibility of an additional rate cut in 2026. This relatively lower rate environment is expected to ease earnings pressure and support AGNC’s net interest income in the upcoming periods.
Active Portfolio Management: AGNC continues to benefit from its disciplined and active portfolio-management approach. The company is taking a cautious approach, using substantial hedges to manage market fluctuations. Over the past few quarters, it has actively adjusted its portfolio to reduce risks from changing interest rates and prepayments. As of Sept. 30, 2025, AGNC maintained a significant interest-rate hedge position covering 68% of its outstanding investment securities repo, TBA (to-be-announced) securities positions, and other debt.
The company has also repositioned certain credit-focused holdings, reduced exposure to non-agency assets, and increased allocations to higher-coupon investments. These adjustments help manage prepayment and interest-rate risks while supporting cash-flow stability.
By actively managing its portfolio, AGNC is well-positioned to capitalize on opportunities in the mortgage market, maintain steady earnings and support long-term growth across varying market cycles.
Exposure to Agency MBS: The company continues to benefit from its focus on stable and well-supported asset classes, particularly Agency mortgage-backed securities (MBS). The guarantee of principal and interest by government-sponsored enterprises makes these securities a more secure investment choice.
While spread widening and mortgage-market volatility have affected the performance of existing Agency MBS holdings, the long-term outlook for newly purchased securities remains favorable. In third-quarter 2025 earnings call, management noted that mortgage spreads relative to benchmark rates have been favorable over the past four years. At the same time, supply remains controlled, and demand is expected to rise.
With $90.1 billion in Agency MBS as of Sept. 30, 2025, AGNC is well-positioned to capture attractive, risk-adjusted returns in the fixed-income market. Overall, this focused exposure supports the company’s long-term growth outlook.
Decent Liquidity Position: It maintains a decent financial position, supported by stable liquidity and broad access to attractive funding across multiple counterparties. This flexibility allows the company to opportunistically enhance its portfolio. As of Sept. 30, 2025, AGNC’s liquidity, including unencumbered cash and Agency MBS, stood at $7.2 billion.
Meanwhile, the company’s leverage increased slightly to 7.6X from 7.5X in the prior quarter, but it continues to operate at a conservative level, enabling it to deploy capital effectively while managing potential spread widening. With significant repurchase agreements backing its investment activities, AGNC is positioned to withstand near-term credit pressures and capitalize on future market opportunities.
Impressive Capital Distributions: AGNC Investment has shown a consistent commitment to shareholder value through disciplined capital actions. In October 2024, the company's board of directors terminated the previous program and approved a new plan authorizing up to $1 billion in share repurchases through Dec. 31, 2026. As of Sept. 30, 2025, the full authorization remained available.
The company intends to repurchase shares only when the price is below its estimate of tangible net book value per share, ensuring disciplined execution. This buyback program will allow AGNC to respond to stock volatility and improve shareholder's wealth over time.
The company also pays a regular dividend, which was reduced by 25% to 12 cents per share in 2020 and has been maintained at that level since. The company currently offers a dividend yield of 13.43%, above the industry average of 12.60%. Notably, the company’s peers, Annaly and Starwood Property, offer yields of 12.52% and 10.66%, respectively.
Dividend Yield
Image Source: Zacks Investment Research
Few Concerns Prevail for AGNC
Macroeconomic Sensitivity: The performance of mREITs such as AGNC Investment remains closely linked to broader macroeconomic trends and financial market conditions. The volatility in the mortgage market, swings in interest rates, and an unfavorable yield curve have affected investment returns.
In recent years, high interest rates and market instability increased debt-servicing costs and weighed on fixed-income performance, contributing to a decline in AGNC’s tangible net book value per share during the first nine months of 2025.
Despite some easing in mortgage rates, residual volatility and ongoing pressure in the residential mortgage sector continue to constrain operating conditions, posing significant near-term challenges for AGNC.
Portfolio Adjustments: AGNC continues to actively manage its investment portfolio in line with prevailing interest-rate conditions and broader economic trends. In response to higher volatility and the Fed’s adjustments to the Agency RMBS portfolio, the company has trimmed certain holdings to prioritize risk and liquidity management.
While this conservative approach helps protect the balance sheet and preserves stability, the company may limit incremental returns in the short term.
How to Approach the AGNC Stock Now?
AGNC Investment presents a cautious risk-reward profile at current levels. Its strengths include disciplined portfolio management, stable liquidity, meaningful hedge protection, and a continued focus on high-quality Agency MBS that provide government-backed cash flows. These factors support the company’s ability to navigate shifting market conditions and support steady income over the long term.
However, investors should weigh these positives against notable headwinds. Despite some relief from lower rates, AGNC remains exposed to spread volatility, macroeconomic uncertainty and limited dividend growth, which together constrain near-term upside.
Analysts seem to be neutral regarding AGNC’s earnings growth potential. Over the past month, the Zacks Consensus Estimate for the company’s earnings for 2025 and 2026 has remained unchanged. The estimated figure implies a decline of 18.6% for 2025, whereas growth of 1.3% for 2026.
Estimates Revision Trend
Image Source: Zacks Investment Research
From a valuation perspective, AGNC appears expensive. The company’s 12-month trailing price to book (P/B) ratio of 1.18X is above the industry’s 0.96X. Notably, Annaly has a trailing P/B ratio of 1.16X while Starwood Property is trading at 0.92X.
Price-to-Book TTM
Image Source: Zacks Investment Research
While management remains optimistic about the Agency MBS market and macroeconomic conditions show some stabilization, the stock’s premium valuation suggests limited upside potential.
Combined with analysts’ neutral stance, AGNC may not offer attractive risk-adjusted returns at its current price. Income-focused investors may still find the elevated dividend yield appealing, but broader upside appears constrained in the near term.
Image: Bigstock
AGNC Investment Gains 14.2% in 6 Months: Should Investors Buy It Now?
Key Takeaways
AGNC Investment Corporation (AGNC - Free Report) shares have gained 14.2% in the past six months, outperforming the industry’s 2.3% growth and the S&P 500 Index’s 11.8% rise. Meanwhile, the company’s peers, Annaly Capital Management (NLY - Free Report) shares have risen 14.8%, whereas shares of Starwood Property Trust, Inc. (STWD - Free Report) have plunged 13.1% in the same time frame.
Six-Month Price Performance
Image Source: Zacks Investment Research
Despite recent strength in its share price, does AGNC stock still have room for further upside? Let’s find out.
What’s Aiding AGNC’s Performance?
Easing Mortgage Rates: AGNC Investment’s performance remains closely tied to movements in mortgage rates, which have been trending lower. Per Freddie Mac report, the average rate on a 30-year fixed-rate mortgage was 6.15% as of Dec. 31, 2025, down from last week, when it averaged 6.18%. A year ago, at this time, the rates averaged 6.91%.
Lower mortgage rates are gradually easing housing affordability challenges and supporting improved loan demand. As refinancing and mortgage origination activity gains momentum, operating conditions for mortgage REITs such as AGNC, Annaly and Starwood Property are expected to improve, leading to higher gain-on-sale margins and increased new investment activity.
At the same time, the Federal Reserve reduced interest rates by 75 basis points in 2025, following a 100-basis-point cut in 2024, and has indicated the possibility of an additional rate cut in 2026. This relatively lower rate environment is expected to ease earnings pressure and support AGNC’s net interest income in the upcoming periods.
Active Portfolio Management: AGNC continues to benefit from its disciplined and active portfolio-management approach. The company is taking a cautious approach, using substantial hedges to manage market fluctuations. Over the past few quarters, it has actively adjusted its portfolio to reduce risks from changing interest rates and prepayments. As of Sept. 30, 2025, AGNC maintained a significant interest-rate hedge position covering 68% of its outstanding investment securities repo, TBA (to-be-announced) securities positions, and other debt.
The company has also repositioned certain credit-focused holdings, reduced exposure to non-agency assets, and increased allocations to higher-coupon investments. These adjustments help manage prepayment and interest-rate risks while supporting cash-flow stability.
By actively managing its portfolio, AGNC is well-positioned to capitalize on opportunities in the mortgage market, maintain steady earnings and support long-term growth across varying market cycles.
Exposure to Agency MBS: The company continues to benefit from its focus on stable and well-supported asset classes, particularly Agency mortgage-backed securities (MBS). The guarantee of principal and interest by government-sponsored enterprises makes these securities a more secure investment choice.
While spread widening and mortgage-market volatility have affected the performance of existing Agency MBS holdings, the long-term outlook for newly purchased securities remains favorable. In third-quarter 2025 earnings call, management noted that mortgage spreads relative to benchmark rates have been favorable over the past four years. At the same time, supply remains controlled, and demand is expected to rise.
With $90.1 billion in Agency MBS as of Sept. 30, 2025, AGNC is well-positioned to capture attractive, risk-adjusted returns in the fixed-income market. Overall, this focused exposure supports the company’s long-term growth outlook.
Decent Liquidity Position: It maintains a decent financial position, supported by stable liquidity and broad access to attractive funding across multiple counterparties. This flexibility allows the company to opportunistically enhance its portfolio. As of Sept. 30, 2025, AGNC’s liquidity, including unencumbered cash and Agency MBS, stood at $7.2 billion.
Meanwhile, the company’s leverage increased slightly to 7.6X from 7.5X in the prior quarter, but it continues to operate at a conservative level, enabling it to deploy capital effectively while managing potential spread widening. With significant repurchase agreements backing its investment activities, AGNC is positioned to withstand near-term credit pressures and capitalize on future market opportunities.
Impressive Capital Distributions: AGNC Investment has shown a consistent commitment to shareholder value through disciplined capital actions. In October 2024, the company's board of directors terminated the previous program and approved a new plan authorizing up to $1 billion in share repurchases through Dec. 31, 2026. As of Sept. 30, 2025, the full authorization remained available.
The company intends to repurchase shares only when the price is below its estimate of tangible net book value per share, ensuring disciplined execution. This buyback program will allow AGNC to respond to stock volatility and improve shareholder's wealth over time.
The company also pays a regular dividend, which was reduced by 25% to 12 cents per share in 2020 and has been maintained at that level since. The company currently offers a dividend yield of 13.43%, above the industry average of 12.60%. Notably, the company’s peers, Annaly and Starwood Property, offer yields of 12.52% and 10.66%, respectively.
Dividend Yield
Image Source: Zacks Investment Research
Few Concerns Prevail for AGNC
Macroeconomic Sensitivity: The performance of mREITs such as AGNC Investment remains closely linked to broader macroeconomic trends and financial market conditions. The volatility in the mortgage market, swings in interest rates, and an unfavorable yield curve have affected investment returns.
In recent years, high interest rates and market instability increased debt-servicing costs and weighed on fixed-income performance, contributing to a decline in AGNC’s tangible net book value per share during the first nine months of 2025.
Despite some easing in mortgage rates, residual volatility and ongoing pressure in the residential mortgage sector continue to constrain operating conditions, posing significant near-term challenges for AGNC.
Portfolio Adjustments: AGNC continues to actively manage its investment portfolio in line with prevailing interest-rate conditions and broader economic trends. In response to higher volatility and the Fed’s adjustments to the Agency RMBS portfolio, the company has trimmed certain holdings to prioritize risk and liquidity management.
While this conservative approach helps protect the balance sheet and preserves stability, the company may limit incremental returns in the short term.
How to Approach the AGNC Stock Now?
AGNC Investment presents a cautious risk-reward profile at current levels. Its strengths include disciplined portfolio management, stable liquidity, meaningful hedge protection, and a continued focus on high-quality Agency MBS that provide government-backed cash flows. These factors support the company’s ability to navigate shifting market conditions and support steady income over the long term.
However, investors should weigh these positives against notable headwinds. Despite some relief from lower rates, AGNC remains exposed to spread volatility, macroeconomic uncertainty and limited dividend growth, which together constrain near-term upside.
Analysts seem to be neutral regarding AGNC’s earnings growth potential. Over the past month, the Zacks Consensus Estimate for the company’s earnings for 2025 and 2026 has remained unchanged. The estimated figure implies a decline of 18.6% for 2025, whereas growth of 1.3% for 2026.
Estimates Revision Trend
Image Source: Zacks Investment Research
From a valuation perspective, AGNC appears expensive. The company’s 12-month trailing price to book (P/B) ratio of 1.18X is above the industry’s 0.96X. Notably, Annaly has a trailing P/B ratio of 1.16X while Starwood Property is trading at 0.92X.
Price-to-Book TTM
Image Source: Zacks Investment Research
While management remains optimistic about the Agency MBS market and macroeconomic conditions show some stabilization, the stock’s premium valuation suggests limited upside potential.
Combined with analysts’ neutral stance, AGNC may not offer attractive risk-adjusted returns at its current price. Income-focused investors may still find the elevated dividend yield appealing, but broader upside appears constrained in the near term.
AGNC currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.