Why the Rally for AGNC Investment Stock Might Be Hiding a Glaring Red Flag
AGNC Investment (NASDAQ: AGNC) is not your typical real estate investment trust (REIT). It doesn't own physical properties, but rather invests in a portfolio of mortgage securities. That makes it more similar to a mutual fund than to a traditional REIT, and the difference has material implications for investors. If AGNC Investment's massive dividend, which currently yields 14.2%, looks tempting, there's one big factor you need to be aware of.Technically, there isn't a big difference in the way you would think about the value of a property-owning REIT and the way you should think about the value of a mortgage REIT (mREIT). Both types of business own income-producing assets. And in both cases, the value of the company is, essentially, the value of the underlying assets that it owns.Image source: Getty Images.Continue reading
AGNC Investment (NASDAQ: AGNC) is not your typical real estate investment trust (REIT). It doesn't own physical properties, but rather invests in a portfolio of mortgage securities. That makes it more similar to a mutual fund than to a traditional REIT, and the difference has material implications for investors. If AGNC Investment's massive dividend, which currently yields 14.2%, looks tempting, there's one big factor you need to be aware of.
Technically, there isn't a big difference in the way you would think about the value of a property-owning REIT and the way you should think about the value of a mortgage REIT (mREIT). Both types of business own income-producing assets. And in both cases, the value of the company is, essentially, the value of the underlying assets that it owns.
Image source: Getty Images.
