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Stop Being Stubborn: Hunting For Dividends In AGNC's Preferred Share

Published Wed, 17 Apr 2019 06:15:00 -0400 on Seeking Alpha

There are a few ways to miss out when looking at preferred shares. One way is to pass on a very attractive security because investors refuse to own anything at a price higher than par value.

If investors absolutely refuse to pay $25.01, they will pass on several great investment opportunities. Rather than treating all securities that trade above par value as being useless for investing, investors should be prepared to amortize the premium over the life of the security.
Being stubborn does not change the facts.
AGNC Investment Corp.
We cover AGNC Investment Corp. (AGNC) occasionally, but we find their preferred shares are far more interesting for investing. The preferred shares carry a lower yield but offer a much more stable price. We recently suggested AGNCB (AGNCB) as a solid choice. Since that rating, the yield to call turned negative as shares went ex-dividend.
Our current (as of 04/09/2019) outlook on AGNCB is shown below:

When we highlighted AGNCB for investors, shares were trading at $25.49. However, they were about to go ex-dividend for $.48. The result was investors would have an effective cost of only $25.01 thanks to the dividend.
These differences may appear minor, but they are an important part of mitigating call risks. When the yield to call is positive, AGNCB is generally a good investment. When it turns negative, the shares become less appealing. A slightly negative yield to call can still be worth the risk, but the potential... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ANNALY CAPITAL MANAGEMENT 9.30   0.0 -1.59 1.20 12.99

ANNALY CAPITAL MANAGEMENT - NLY
ANNALY CAPITAL MANAGEMENT - NLY  


Older articles featuring Annaly Capital Management (NLY):
Income Investing And The Changing Yield Curve
AGNC Investment's Q2 2019 Income Statement And Earnings Projection - Part 2 (Includes Dividend Sustainability...
My Dividend Growth Portfolio Q2 Update: 41 Holdings, 8 Buys, 8 Sells
2019 Half Year 10% Yield Update; Truth Behind High-Yield Is Revealed
An Exceptionally Steady 6.9% Yield From Annaly Capital Management's Preferred
MORL-MRRL Spread Hits An All-Time High. Opportunities In The 20%+ Current Yield ETNs
Global X SuperDividend REIT ETF: 8% Yield Comes With Higher Risk
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Why We Are Invested In These Super High Dividends - Yields Up To 16.2%

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