Is AGNC Still a Reliable Income Pick After Its Latest Earnings?

AGNC (AGNC 1.94%), one of the largest mortgage real estate investment trusts (mREITs) in America, might seem like a tempting income play with a massive forward yield of 13.6%. But is that dividend sustainable, or is it a high-yield trap? Let’s review how AGNC funds its dividends, and whether its latest earnings report makes it a less reliable income investment.

How does AGNC fund its massive dividend?

AGNC buys mortgages and mortgage-backed securities (MBS), collects interest from those investments, and distributes at least 90% of its taxable income to its investors. It allocates 89% of its $94.7 billion portfolio to Agency MBS assets (backed by Fannie Mae, Freddie Mac, or Ginnie Mae), which shields it from another housing market crash.

For AGNC to generate consistent profits, it must earn enough interest from its long-term MBS to cover its ongoing purchases of short-term MBS. To maintain that balance, the Fed’s short-term rates must stay lower than its long-term rates, and the housing market must remain stable.

To gauge AGNC’s financial health, we look at its net interest spread: the gap between the average yield it earns on its MBS and the average costs of funding those purchases. That ratio fell year over year (because of lower yields on its older MBS), but rose sequentially over the past two quarters as those legacy transactions rolled off.

Data source: AGNC.

Analysts expect AGNC’s EPS to rise 4% to $1.57 in 2026 as those spreads stabilize. That should easily cover its forward dividend rate of $1.44. However, it has kept its dividend unchanged since 2020, and it previously reduced its payout three times (in 2015, 2016, and 2019) to deal with fluctuating interest rates and other macroeconomic headwinds.

Today’s Change

(-1.94%) $-0.20

Current Price

$10.36

Key Data Points

Market Cap

$12B

Day’s Range

$10.36 – $10.59

52wk Range

$9.05 – $12.19

Volume

290.6K

Avg Vol

16.4M

Gross Margin

100.00%

Dividend Yield

13.64%

Is AGNC still a reliable income stock?

Over the past ten years, AGNC’s stock has declined 45%. With reinvested dividends, it only delivered a total return of 89% and underperformed the S&P 500’s total return of 328%.

Therefore, AGNC isn’t really a reliable long-term income play — since interest rate swings and mortgage rates will impact its stability — but it also isn’t a high-yield trap. I think it’s a decent dividend stock to hold for earning some short-term income in a bull market, but I wouldn’t blindly hold it through the next bear market and expect it to maintain its current dividend yield.