AGNC Investment: Not a Buy in 2024, and Unlikely in 2025

As an experienced investor, I've always been drawn to companies that offer stability, predictability, and consistent growth. AGNC Investment Corp (AGNC), a mortgage real estate investment trust (mREIT), initially seemed like a promising addition to my portfolio. However, recent developments have led me to reconsider my stance on this company, and I believe it's unlikely to be a buy in 2025 either.

AGNC's business model, focusing on Agency MBS, has historically provided a stable income stream. However, the company's high leverage and hedging strategies have exposed it to interest rate and prepayment risks. In 2024, AGNC's stock price forecast was negative, with an average analyst price target of $8.498, representing a -11.85% decrease from the current price of $9.64. This was likely influenced by rising interest rates and a flattening yield curve, which can negatively impact mortgage REITs like AGNC.



Despite the attractive 15% dividend yield, AGNC's sustainability is questionable due to expiring low-cost swaps and rising interest expenses. The company's preferred stocks, such as AGNCP, may offer high yields, but their long-term viability remains uncertain. In 2025, if interest rates continue to rise and the yield curve remains flat or inverts, AGNC's performance may remain subdued.

As an investor, I value companies with robust management and enduring business models. While AGNC may have offered high dividends in the past, its long-term investment appeal is uncertain. I believe it's crucial to understand individual business operations over standard metrics, and in this case, AGNC's high leverage and hedging strategies pose too great a risk for my portfolio.

In conclusion, AGNC Investment Corp was not a compelling buy in 2024, and the outlook for 2025 remains uncertain. While the company may offer high dividends, its long-term sustainability and investment appeal are questionable. As an investor, I prefer companies that offer stability, predictability, and consistent growth, and AGNC does not currently meet these criteria.

Action AlertsPLUS, managed by the author, holds no positions in any mentioned securities.