AGNC NVDA Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
AGNC Investment (NASDAQ:AGNC) reported a 16.9% decline in its tangible book value in the third quarter, a $1.45 drop to $7.13 per share, as surging Treasury yields pummeled mortgage-backed securities (MBS). These headwinds have weighed on its shares, which have lost a quarter of their value over the last three months, driving the mortgage REIT's dividend yield above 17.5%.
Those numbers would make any income investor nervous. However, the mortgage REIT pays its monthly dividend from income, not book value, and that income remains high enough to cover the payout. That's why its monthly dividend didn't budge. AGNC just paid its $0.12-per-share monthly dividend for November, the same rate it has paid since 2020. I'm not worried about the payout, at least for now.
Missed AI's "Act 1"? Act 2 Could Be 16x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
AGNC's preferred earnings gauge, net spread and dollar roll income came in at $0.37 per share in the third quarter, just above the $0.36 in declared dividends. That's thin, and the trend is moving in the wrong direction: $0.42 in the first quarter and $0.40 in the second.
The squeeze came from rising funding costs. Its average cost of funds rose to 3.09% from 2.89%. That more than offset the slight rise in average asset yield (from 4.89% to 4.95%). If funding costs stabilize, the pressure should ease. On a positive note, AGNC sold $992 million of stock above book value during the quarter, enabling it to add about $2.5 billion of assets at wider spreads, which should help bolster its future earnings capacity.
AGNC's other favored dividend sustainability measure is its return on equity (ROE) compared to its cost of capital. CEO Peter Federico noted on the third-quarter call that the REIT ended the quarter with a total cost of capital of around 19%, including its operating costs and dividend payments. He also pointed out that its existing portfolio generated around a 20% return during the quarter, based on its current book value and net dollar spread income. Meanwhile, new investments are generating around a 19% return. That led the CEO to conclude that "our dividend continued to be well-aligned with the economics of our business."
Core earnings below $0.36 per share for a quarter or two, which would leave the payout uncovered.
A shrinking premium to book value. AGNC currently trades at around $8.20 per share, a 15% premium to its book value. That premium allows it to issue equity to make accretive new investments.
Returns fall below costs. AGNC's returns currently align with its costs; if they fall below that level, its dividend would be at risk of another reduction.
A 17.5% yield after a 17% quarterly book-value decline is certainly concerning. However, AGNC's core earnings still cover the dividend, and its returns remain aligned with its costs. That's why I'm not worried about the dividend just yet. However, I'd still treat AGNC as a high-risk income holding and watch those numbers closely every quarter.
Before you buy stock in AGNC Investment Corp., consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AGNC Investment Corp. wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $335,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,000,640!*
Now, it's worth noting Stock Advisor's total average return is 823% — a market-crushing outperformance compared to 208% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of November 14, 2026.
Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
AGNC's Book Value Fell 17% in One Quarter. Here's Why I'm Still Not Worried About the 17.5%-Yielding Dividend Just Yet. was originally published by The Motley Fool
