Mortgage actual property funding belief AGNC Funding Corp. (Nasdaq: AGNC) is among the most requested shares within the Security Web column due to its double-digit yield. Because it’s so in style, I be certain that to assessment it no less than annually.
Final 12 months, the inventory acquired a “D” score for dividend security. At the moment, the yield was beneath double digits. However as a result of the worth of the inventory fell considerably over the previous 12 months (as did the costs of many different shares), the yield is now 12.8%.
The excellent news is that internet curiosity revenue (NII) took off in 2021 and has roughly stayed fixed since then.
NII rose from $845 million in 2020 to $1.3 billion in 2021. For 2022, NII is projected to come back in at $1.5 billion when the corporate reviews full-year outcomes. Nevertheless, Wall Avenue forecasts a slight dip to $1.3 billion in 2023.
Contemplating that AGNC is anticipated to pay $855 million in dividends, that’s not an enormous deal. Although Security Web does penalize corporations for declining money stream or, on this case, NII. If estimates for 2023 rise to greater than $1.5 billion, the inventory will get an improve from Security Web.
As a result of NII is significantly increased than the anticipated dividend, there doesn’t seem like imminent hazard of a lower. Nevertheless, AGNC has a sordid historical past relating to its dividend.
The corporate started paying dividends in 2008. Since then, it has steadily lowered the dividend since 2009, decreasing it eight instances to its present $0.12 per share month-to-month.
Whereas AGNC can afford its dividend immediately, it has proven time and again that when the going will get powerful, administration slashes the dividend.
Traders can in all probability financial institution on the dividend this 12 months so long as NII is available in close to the place it’s anticipated. However relaxation assured, the subsequent massive downturn in NII shall be accompanied by yet one more dividend lower.
Dividend Security Score: F
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