Farmer Mac's Preferred Stock Series E (AGM-PR.E): A High-Yield Haven in a Volatile Market

In a world where bond yields hover near historic lows and equity dividends face uncertainty, income-seeking investors are increasingly turning to non-cumulative preferred stocks offering steady payouts. Among these, Federal Agricultural Mortgage Corporation’s (Farmer Mac) Series E Preferred Stock (AGM-PR.E) stands out as a rare gem: a 6.32% forward yield paired with the stability of a government-sponsored enterprise (GSE) underpinning rural America’s financial infrastructure. With its next dividend payment of $0.359375 per share set for July 17, 2025, AGM-PR.E presents a compelling buy for investors prioritizing high income with low default risk.

The Allure of AGM-PR.E’s 6.32% Forward Yield

The 5.75% annual dividend rate of AGM-PR.E translates to a $1.4375 annual payout per share, backed by quarterly distributions of $0.359375. As of February 2025, this yield reached 6.32%, calculated using a share price of $22.75. While the recent market price has risen to $24.05, trimming the yield to 5.98%, this still dwarfs the 0.9% average yield of diversified financial preferred stocks and comfortably exceeds the 1.5% yield marking the bottom 25% of U.S. dividend payers.

Why the Dividends Stay Strong

Farmer Mac’s role as a GSE dedicated to agricultural and rural financing ensures steady cash flows. Unlike volatile sectors, its mission to support farmers, ranchers, and rural utilities through loans and mortgages creates a recession-resistant revenue stream. Key metrics confirm this stability:
- Payout Ratio: Only 35% of earnings is allocated to dividends, ensuring ample coverage.
- Consistency: No missed or reduced payments since the Series E’s 2020 issuance.
- Non-Cumulative Structure: While dividends aren’t guaranteed, Farmer Mac’s 40-year history of uninterrupted distributions across preferred classes signals fiscal discipline.

The company’s focus on high-demand rural infrastructure projects—such as renewable energy installations and farm modernization—aligns with federal priorities, further insulating its revenue.

Low Default Risk in a Mission-Critical Entity

As a GSE, Farmer Mac operates with implicit government support, a key distinction from private financial firms. Its AA+ credit rating (as of 2023) reflects this stability, and its $25 liquidation preference guarantees shareholders receive par value in liquidation—currently a 3.8% premium to its market price.

Critics may point to risks like interest rate hikes or regulatory shifts, but Farmer Mac’s diversified loan portfolio and government-backed mandate mitigate these concerns. Its cash payout ratio of 20.1% underscores robust liquidity, while its $24.05 share price trades at a discount to liquidation value, adding a margin of safety.

Timing the Buy Before July 17

The next dividend payment of $0.359375 per share will be distributed on July 17, 2025, to shareholders of record as of July 1. Investors purchasing shares before July 1 will capture this payout, making the $24.05 price a strategic entry point.

With the July 17 payment just weeks away, the urgency to act is clear. Even if yields dip slightly as prices rise, the 5.98% yield remains a standout in today’s low-yield environment.

Final Analysis: A Safe, High-Income Play for 2025

AGM-PR.E combines three investor-friendly traits:
1. Unmatched Yield: Outperforms nearly all preferred stocks in its sector.
2. Structural Stability: Backed by a GSE’s mission-critical role.
3. Predictable Cash Flow: Quarterly dividends since 2020, with no defaults.

For retirees or income-focused portfolios, this preferred stock offers a high-yield anchor in an otherwise uncertain market. The $24.05 price—still below liquidation value—and the July 17 dividend create a limited-time opportunity to lock in returns before the next payout cycle.

Act now to secure a 5.98% yield while safeguarding capital through Farmer Mac’s essential role in America’s agricultural backbone.