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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 8.60   0.0 -3.32 1.20 14.00

ANNALY CAPITAL MANAGEMENT - NLY
ANNALY CAPITAL MANAGEMENT - NLY  


Older articles featuring Annaly Capital Management (NLY):
Whether The The Great Reach For Yield Experiment Has Failed
3 Quality Preferred Shares I Have Been Buying, Yields Up To 8%
Dividend Yields Up To 40% - Yeah It Happened
Opportunities In The Remaining High-Yield 2x Leveraged ETNs
10% Yields Created By Hectic Market, Preferred Shares Offer Huge Discounts
Reduce Volatility With High Yield - The Income Method
AGNC: 10%-Plus Yield, Beat Earnings, Best Stock To Own In A Recession
2020: The Annual 'Shock And Awe' Truth Between Cost And Dividends From A 100% High-Yield Portfolio
10 High-Dividend Stocks Paying Up to 15%
Fat Dividend Yields Or Big Growth From REITs In 2020

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