AGNC vs. Realty Income: Una perspectiva histórica sobre el rendimiento, el riesgo y el dilema del inversor que busca ingresos constantes

The choice between AGNC and Realty Income boils down to a classic trade-off: chasing a high yield or securing reliable income. As of year-end, the numbers are stark. AGNC Investment offers a dividend yield of 13.5%, more than double Realty Income's 5.7%. Yet this gap is not just a difference in percentage points-it's a chasm in investment philosophy and risk profile.

Realty Income's appeal lies in its unwavering commitment to the income investor. The company has consistently increased its dividend over the past three decades, a record of 28 consecutive years of dividend increases. This stability is built on a foundation of long-term, triple-net leases with large, established tenants. The model is designed for predictable cash flow, making it a cornerstone for retirees and others who need dependable income. Its lower yield is a known cost for that durability.

AGNC's high yield, by contrast, is a product of its leveraged, interest-rate-sensitive business model. The company invests in mortgage-backed securities and uses short-term borrowing to amplify returns. This structure is inherently volatile. The evidence of its vulnerability is clear: AGNC has a history of multiple dividend cuts in the past decade. When short-term rates rise faster than long-term rates, as they have in recent years, the spread that funds its dividend can compress or even vanish, forcing a cut. The high yield is not a static return but a variable that can be withdrawn.

Viewed through a historical lens, this is the central dilemma. Realty Income offers a proven path of steady income growth, a strategy that has weathered multiple market cycles. AGNC offers a high-yield opportunity that has often been a trap for investors seeking safety. The question for any income-focused investor is whether AGNC's current yield is a sustainable, attractive return or a temporary, high-risk proposition that could be followed by another cut. The past decade's history suggests the latter is a very real possibility.

Business Models and Their Historical Cycles

The stark yield difference between AGNC and Realty Income is not an accident of the market; it is the direct result of two fundamentally different business models, each with its own historical cycle of performance and risk.

AGNC operates a leveraged strategy in Agency RMBS, a model that has historically thrived in specific interest rate regimes. The company borrows short-term to buy long-term mortgage securities, profiting from the spread between the two. Its recent 90-day return of 9.41% highlights this sensitivity. That move came amid falling mortgage rates, which typically compress agency spreads and pressure the net interest income that funds AGNC's high dividend. The model is a classic leveraged bet on yield curve dynamics. Historically, such strategies have delivered outsized returns during periods of falling or stable rates, but they are vulnerable when volatility spikes or when short-term funding costs rise faster than long-term yields-precisely the scenario that has forced past dividend cuts. The current rally may reflect a market pricing in a continuation of favorable conditions, but the underlying structure remains exposed to the same cyclical pressures that have defined the mortgage REIT sector.

Realty Income, by contrast, builds its income stream through a net-lease model in single-tenant properties. This structure provides inherently stable cash flows because tenants bear most operating expenses and lease terms are long. Historically, this model has acted as a defensive play, often outperforming broader markets during periods of economic uncertainty. The stability of its cash flow is the foundation for its 28 consecutive years of dividend increases. While not immune to downturns, its diversified portfolio of over 15,500 properties spreads the risk of any single tenant default. This creates a different kind of cycle-one of steady, inflation-protected growth rather than volatile, rate-driven swings.

The broader REIT sector's performance in December 2025 illustrates the divergence between these models. While equity REITs were down 2.1% for the month, reflecting concerns over economic growth and property valuations, mortgage REITs like AGNC saw a starkly different path, with the sector up 16% for the year. This split is a direct echo of historical cycles. In periods of rate volatility and economic stress, the leveraged, spread-dependent model of mortgage REITs often faces severe headwinds, while the stable, cash-flow-oriented model of equity REITs can be more resilient. Yet the recent outperformance of mortgage REITs suggests a regime where falling rates and compressed spreads have temporarily favored AGNC's strategy. The historical lesson is clear: each model excels in different market environments. The investor's task is to determine which cycle the market is in-and which model is best positioned to navigate it.

Financial Impact and Valuation Scenarios

The contrasting business models set up divergent financial stories. For Realty Income, the path is one of steady, inflation-protected growth. J.P. Morgan Research forecasts a clear trajectory: REIT earnings growth will remain about 3% in 2025, but the return of investment activity should help companies accelerate to nearly 6% in 2026. This supports a total return setup of roughly 10%, combining a 4% dividend yield with modest FFO growth and potential valuation expansion. The stability of its earnings base is the bedrock of this forecast. In practice, this means Realty Income's income stream is designed to be resilient, even if growth is moderate.

AGNC's story is one of volatility and high-stakes valuation debate. Its earnings power is not driven by stable property income, but by the net interest margin on its leveraged mortgage portfolio. This margin is the direct target of historical cycles, swinging with mortgage rates and agency spreads. The recent 90-day return of 9.41% reflects a market pricing in favorable conditions, but the underlying risk remains. Valuation here is a battleground. One narrative sees the stock as 11.2% overvalued at current prices, citing risks like interest rate volatility. Another, a discounted cash flow model, points to a 52% discount to intrinsic value. This chasm in views underscores the uncertainty. The company's plan to leverage current agency spreads within a defined range offers a path to stabilized earnings, but it is a bet on a specific rate environment holding.

Connecting these scenarios to the historical cycles is straightforward. Realty Income's forecast mirrors its historical defensive role-a steady, if unspectacular, growth path that can outperform in economic slowdowns. AGNC's valuation extremes reflect the cyclical nature of its model. The deep discount view assumes a return to the volatility that has historically pressured its spreads and dividend. The overvaluation view assumes the current favorable regime persists. The historical lesson is that the mortgage REIT's earnings and valuation are not independent of the broader interest rate cycle; they are its direct function.

The structural difference in yield drivers is the core of the dilemma. Realty Income's yield is supported by a stable earnings base that grows with inflation. AGNC's yield is a function of a volatile net interest margin, which can compress or vanish in a rising rate environment. For the income investor, this means choosing between a reliable, modest return or a high, variable one that is fundamentally tied to the unpredictable path of interest rates. The past decade's history of dividend cuts for AGNC is a stark warning that the high yield is not a guaranteed income stream, but a potential target for erosion.

Catalysts, Risks, and What to Watch

The investment thesis for each stock now hinges on a set of forward-looking catalysts that will test their historical cycles and structural differences. For AGNC, the immediate watchpoint is the stability of agency spreads. The company's recent 90-day return of 9.41% reflects a market pricing in favorable conditions, but the underlying model is a leveraged bet on these spreads holding. Any widening of the spread between long-term mortgage yields and short-term funding costs would directly pressure its net interest margin and, by extension, its high dividend. This risk is compounded by the broader interest rate path. The Fed's stance on rates will dictate the funding cost environment for AGNC's short-term borrowing, making the central bank's next moves a critical macro catalyst.

For Realty Income, the key metrics are tenant credit quality and the pace of dividend growth relative to inflation. The company's defensive, net-lease model relies on the financial strength of its over 15,500 tenants. Economic stress could test this credit, potentially leading to lease renegotiations or defaults that would erode its predictable cash flow. More broadly, the sustainability of its 28 consecutive years of dividend increases depends on its ability to grow earnings in line with inflation. If FFO growth falters or inflation spikes, the company's ability to maintain its dividend growth trajectory could be challenged, undermining the core promise of dependable returns.

The decisive macro catalyst, however, is the broader market's appetite for risk. The stark performance split in 2025-where the FTSE Nareit Mortgage REITs Index rose 16.0% while equity REITs were down 2.1% in December-highlights a clear rotation. This dynamic will likely persist as a key driver. If market sentiment turns toward safety, favoring Realty Income's stable cash flow, the mortgage REITs could face renewed pressure. Conversely, if the market remains optimistic about a soft-landing and falling rates, AGNC's high-yield, spread-dependent model could continue to attract capital. This is the historical cycle in action: the market's preference swings between leveraged, rate-sensitive assets and defensive, income-growth stocks based on the prevailing economic regime. Investors must watch these catalysts not in isolation, but as signals of which cycle the market is currently in.