Is AGNC Investment Stock a Buy Now? (2025)

Geoffrey Seiler, The Motley Fool

Thu, Apr 17, 2025, 4:14 AM 5 min read

At around 17%, AGNC Investment (NASDAQ: AGNC) has one of the highest dividend yields around. While that is certainly attractive for income-oriented investors, the bigger question is whether or not the stock is a buy. After all, yields that high can sometimes be a red flag.

AGNC is a mortgage real estate investment trust (REIT) that holds a portfolio of agency mortgage-backed securities (MBSes). Given that its holdings are backed by government agencies such as Fannie Mae and Freddie Mac, it carries de minimus credit risk. However, the stock is far from risk-free.

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Mortgage REITs carry a number of risks. Chief among them is interest rate risk. When mortgage rates rise, the value of older MBSes with lower yields will decline. This dynamic is captured in a mortgage REIT's tangible book value (TBV), which represents the value of its investment portfolio. When mortgage rates shot higher after the Federal Reserve began raising rates and unwinding its own MBS portfolio that it acquired as part of quantitive easing, AGNC's TBV plunged, as did its stock. From the end of 2021 until the end of 2023, AGNC's TBV sank 45% from $15.75 per share down to $8.70 per share.

Ahead of its first-quarter 2025 earnings, AGNC revealed that its TBV per share at the end of the quarter sat at $8.25. That was down from $8.41 at the end of 2024. It also estimated that its TBV was between $7.75 and $7.85 per share as of April 9.

The decline in AGNC's TBV can be attributed to the reaction of the bond market to President Donald Trump's tariffs. The haphazard nature in which the tariffs have been rolled out and delayed has shaken the world's confidence in the U.S. and in Treasury bonds as a safe haven. Instead of investors running to Treasuries given the uncertainty of the economy, they instead sold, spiking Treasury yields in the process. As is typical, mortgage rates followed suit and also climbed higher.

While there has been a lot of noise in the bond market, AGNC could still be in a decent position moving forward if the Fed reacts and starts cutting interest rates or if it even steps into the markets and starts buying securities. Trump has called for the Fed to slash rates, but Fed Chair Jerome Powell wants a clearer picture on the impact of tariffs before taking action. The administration consistently changing policies isn't helping, nor is the inflationary impact of tariffs. However, if the economy starts heading into a recession, there is a good chance the Fed will act.