Latest news with #MBS
Yahoo
6 hours ago
- Business
- Yahoo
How Should You Approach AGNC Investment Stock Post Weak Q2 Results?
AGNC Investment Corp. AGNC posted second-quarter 2025 results on July 21, with both top and bottom lines missing the Zacks Consensus Estimates. Amid ongoing tariff concerns and persistent volatility in the mortgage market, AGNC faced a challenging environment for mortgage-backed securities (MBS), which weighed heavily on its financial performance. One of the key metrics for mortgage REITs (mREITs) is tangible book value (TBV), a reflection of the underlying portfolio's value. In the second quarter, AGNC's TBV declined 7% year over year to $7.81. The average net interest spread, a critical indicator of earnings potential, narrowed to 2.01% from 2.69% a year ago. This decline reflects diminishing hedge benefits and rising hedge costs, further pressuring profitability. Adding to the headwinds, economic return on tangible common equity came in at negative 1%, slightly worse than the negative 0.9% recorded in the second quarter of 2024. Despite these challenges, AGNC demonstrated resilience through strong risk management and ample liquidity, enabling the REIT to maintain its portfolio and selectively add assets at attractive prices. Notably, the average asset yield improved to 4.87% from 4.69% in the prior-year quarter, indicating the potential for better income generation in a more favorable rate environment. Given the volatility in the mortgage market and AGNC's underwhelming quarterly performance, how should investors approach the stock going forward? Let us explore the key factors and assess whether AGNC remains a worthy investment in the current environment. AGNC Investment & Agency MBS Outlook AGNC has maintained its focus on agency MBS, a strategy that has positioned it as a strong player in this specialized market segment. AGNC Investment primarily focuses on leveraged investments in Agency residential MBS, including residential mortgage pass-through securities and collateralized mortgage obligations. A U.S. Government agency or a U.S. Government-sponsored enterprise guarantees the principal and interest payments for such investments. While the MBS market experienced some turbulence last quarter, it is still an attractive investment market. During the second-quarter earnings call, AGNC Investment's CEO, Peter Federico, stated, "We continue to have a favorable outlook for levered and hedged Agency MBS investments." He noted that "mortgage spreads to benchmark rates remain elevated by historical standards and range-bound, an extremely favorable return environment." Management noted that MBS spreads have tightened since quarter-end and expects banks and foreign investor demand to grow in the upcoming period. Although the market is extremely competitive, the company's focus on agency MBS puts it in a position to possibly profit from favorable trends. However, execution will be crucial to achieving these advantages. AGNC & Mortgage Rates AGNC Investment's performance and prospects are significantly influenced by mortgage rates. Mortgage rates have been declining lately. Per a Freddie Mac report, the average rate on a 30-year fixed-rate mortgage was 6.74% as of July 24, 2025, down from 6.78% in the same week a year ago. Housing affordability challenges are expected to decline with lower mortgage rates. With rates trending lower and balanced supply/affordability playing out in the mortgage market, loan demand is witnessing an increase. With this, mortgage originations and refinancing volumes are seeing a positive trend. This will likely reduce operational and financial challenges for mREITs like AGNC, and increase the gain on sale margin and new investment activity. The Federal Reserve's decision to keep the interest rate steady after reducing it by 100 basis points in 2024 has helped stabilize the company's funding costs. This will also keep easing earnings pressure for AGNC Investment, which will help the company to increase its dividend payout. AGNC's Impressive Payout One of the closely watched aspects of AGNC Investment's financial profile is its dividend policy. AGNC's current dividend yield is 14.8%. This is impressive compared with the industry's average of 12.3%. This attracts investors as it represents a steady income stream. It currently sits at a payout ratio of 89%. Dividend Yield Image Source: Zacks Investment Research AGNC Investment's peers, Annaly Capital Management NLY and Arbor Realty Trust ABR, are also providing investors with solid dividend options. Annaly Capital Management has an annual dividend yield of 13.4%, whereas ABR has a dividend yield of 9.9%. Dividends aside, AGNC has a share repurchase plan in place. In October 2024, the company's board of directors terminated the existing stock repurchase plan and replaced it with a new plan authorizing it to repurchase up to $1 billion of common stock through Dec. 31, 2026. As of June 30, 2025, full authorization was available for repurchase. AGNC Price Performance & Valuation Analysis Year to date, AGNC Investment shares have gained 13.7% compared with the industry's rise of 9%. Meanwhile, AGNC peers Annaly Capital Management have gained 22.3% while Arbor Realty have declined 7.2% over the same time frame. Price Performance Image Source: Zacks Investment Research From a valuation standpoint, AGNC appears expensive relative to the industry. The company is currently trading at a premium with a forward 12-month price-to-tangible book (P/TB) multiple of 1.25X, above the industry average of 0.99X. AGNC Investment is also trading at a premium compared with Annaly Capital Management and Arbor Realty, which have forward 12-month P/TB of 1.09X and 1.04X, respectively. Price-to-Tangible Book TTM Image Source: Zacks Investment Research How to Approach AGNC Stock? AGNC Investment continues to offer an appealing dividend yield, which may attract income-focused investors. However, recent developments raise concerns about the stock's near-term prospects. The company's weak second-quarter performance, declining tangible book value, and tightening net interest spreads signal underlying challenges. Given the concern, the company's earnings are expected to remain under pressure. Earnings Estimates Image Source: Zacks Investment Research While management maintains a positive outlook on the agency MBS market and macroeconomic conditions show signs of stabilization, its premium valuation indicates limited upside potential, especially in an environment where profitability is under pressure. Given these headwinds and underwhelming fundamental metrics, investors might consider selling AGNC stock. The company currently carries a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AGNC Investment Corp. (AGNC) : Free Stock Analysis Report Arbor Realty Trust (ABR) : Free Stock Analysis Report Annaly Capital Management Inc (NLY) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Time of India
a day ago
- Politics
- Time of India
'No THAAD...': Saudi Rejects 'Trump Pressure' To Defend Israel; US' Arab Ally Sides With Iran?
/ Jul 28, 2025, 04:58AM IST During the 12-day Iran-Israel conflict, Saudi Arabia reportedly refused a U.S. request to provide THAAD missile interceptors to support Israel, despite concerns over Iran's ballistic attacks. The U.S. had appealed to several allies for aid, but Riyadh declined, prioritizing its own THAAD deployment. The move signals a strategic shift by Crown Prince MBS, reflecting regional realignments and cautious distancing from direct involvement in U.S.-Israel military efforts.
The Review Geek
2 days ago
- Entertainment
- The Review Geek
DanDaDan Season 2 Episode 5 Preview: Release Date, Time & Where To Watch
DanDaDan Season 2 One of last year's breakaway anime hits is back, and season 2 looks like it's going to be just as insane and balls-to-the-wall as what we saw the first time around. With Momo and Okarun off on the hunt for the latter's second ball, the gang end up helping Jiji with his haunted apartment. However, what they find is far from a walk in the park. From here, the season looks set to pick up in a massive way, as our dysfunctional group work together to thwart more ghosts and aliens. If you've been following this anime, you may be curious to find out when the next episode is releasing. Well, wonder no more! Here is everything you need to know about episode 5 of DanDaDan Season 2, including the release date, time, and where you can watch this. Where Can I Watch DanDaDan? DanDaDan is airing in Japan on JNN (MBS, TBS). For those watching internationally, just like with the first season this one will be streaming on both Netflix and Crunchyroll worldwide. DanDaDan Season 2 Episode 5 Release Date DanDaDan Season 2 Episode 5 will release on Thursday 31st July in Japan at approximately 5pm (GMT)/ 1pm (ET) / 10am (PT). DanDaDan's episodes will drop in the native Japanese language with subtitles. Just like with the first season though, dubbing will be available from release too, so if you want to watch this with English audio, you absolutely can! How Many Episodes Will DanDaDan Season 2 Have? Just like with the first season, it has been officially announced that DanDaDan swill drop with a 12 episode season order, which is consistent with what we've come to expect from this quirky anime. One episode will be releasing a week, while each chapter will run for around 25 minutes long. So with that in mind, we've got 7 more episodes left after this week's chapter. Is There A Trailer For DanDaDan Season 2? Yes! You can find a trailer for DanDaDan below: What do you hope to see as the series progresses? What's been your favourite moment of DanDaDan so far? Let us know in the comments below!
Yahoo
2 days ago
- Business
- Yahoo
AGNC Investment: After Another Tough Quarter, Can the Stock Maintain Its Dividend?
Key Points AGNC saw another tough quarter and MBS spreads rose. However, the mortgage REIT is expecting better times ahead when banks return to the MBS market. In the current environment, the mREIT looks like it can earn enough to maintain its current dividend, but it's getting tighter. 10 stocks we like better than AGNC Investment Corp. › The ongoing tariff situation, along with tensions between President Donald Trump and Federal Reserve Chair Jerome Powell, continued to make for a difficult mortgage-backed security (MBS) market in the second quarter. While mortgage real estate investment trust (mREIT) AGNC Investment (NASDAQ: AGNC) was able to navigate the market, the environment weighed on its results. With the stock yielding more than 15%, let's see if better days could be ahead and whether the stock can maintain its dividend. Rates remain in focus AGNC is an mREIT that primarily holds a portfolio of MBSes that are backed by government-sponsored agencies, such as Fannie Mae and Freddie Mac. MBSes are residential mortgages that are bundled into bond-like securities, and since they are backed by government-sponsored agencies, they are generally regarded as being largely free from the risk of default. However, like other bonds, interest rates have an effect on MBS values, and their yields trade at a spread to U.S. Treasury yields, which are considered the ultimate safe haven. A few years ago, mREITs came under significant pressure due to the Fed raising rates and MBS spreads widening, as the Fed let MBSes that it had acquired as part of earlier quantitative easing roll off its balance sheet. This also led to the highly publicized blowup of Silicon Valley Bank, which was heavily invested in MBSes at the time. Since then, with regulatory tightening, banks have shied away from owning longer-duration assets like MBSes. On its Q2 call, AGNC said that despite the Federal Reserve and Treasury Department indicating that beneficial regulatory reforms were coming, banks remained largely on the sidelines. It also noted that foreign investor demand appeared subdued due to a weak U.S. dollar and geopolitical risk. However, it noted that MBS spreads have tightened since quarter-end and that it expects banks and foreign investor demand to grow in the future. This dynamic could help the current wide MBS spread to narrow. Importantly, AGNC said comments from President Trump and Treasury Secretary Scott Bessent should help ease any investor concerns about the future of Fannie and Freddie and their role in the mortgage markets. Trump said that while he wants to take the GSEs (Fannie and Freddie) public, he will do so with the U.S. government keeping its implicit guarantee. In addition, Treasury Secretary Bessent said one requirement of privatization would be for MBS spreads to remain the same, and ideally, he wants them tightened. That should help take a major potential risk off the table for AGNC and other mREITs. One of the most important metrics for mREITs is their tangible book value (TBV), which is essentially the value of their portfolio. The market turmoil caused AGNC's TBV to fall 5%, or $0.44 per share, to $7.81 at the end of Q2, down from $8.25 per share at the end of Q1. It said it has risen 1% for July after deducting its dividend. Looking at other important metrics in the quarter, AGNC's average net interest spread was 2.01%, compared to 2.69% a year ago and 2.12% in the first quarter. The narrower spread stems from the lessening benefits of its hedges and higher hedge costs. Overall, AGNC generated $0.38 per share in net spread and income from dollar rolls (a hedging strategy equivalent to short-selling but specifically employed in MBS markets to avoid losses when MBS values decline), which it uses to pay out its dividend. It generated a negative 1% economic return on its tangible common equity, with its TBV falling $0.44 per share while it paid out $0.36 per share in dividends during the quarter. AGNC ended the quarter with higher debt, with 7.6 times tangible net book value "at risk" leverage (debt + net receivables or payables for unsettled investment securities outstanding/shareholder equity excluding goodwill). That compares to 7.5 at the end of the first quarter and 7.4 a year ago. The company said it was in a position to deploy capital at a measured pace, but that it has room to increase leverage slightly. During the quarter, it raised $800 million in equity through its ATM (at-the-market) program at a significant premium to its TBV. It had invested less than half the proceeds at quarter-end and will continue to put the money to work. While equity raises are dilutive for companies, when mortgage REITs raise equity above TBV, it actually increases the TBV, so it is a positive. Is AGNC stock a buy? AGNC is still generating enough income to cover its large dividend, and it expects its net spread and dollar roll income to stay in the mid- to high-$0.30 to the low- to mid-$0.40 range, which should help support it. However, for the stock to really work, it needs to see its TBV rally. The Fed seems reluctant to lower interest rates at the moment, although the biggest TBV catalyst for the mREIT would be tighter MBS spreads. Wide spreads can be beneficial to AGNC when it's putting money to work and investing in MBSes, as it can get higher returns. However, it needs the spreads to eventually narrow for the stock to benefit. AGNC said that a high percentage of its mortgage-backed securities is in specified pools with favorable prepayment attributes, so it is not likely to see a lot of refinancing with lower rates. As such, lower rates and spreads would be a big benefit for the stock. With MBS spreads near historical highs, I think risk-tolerant, income-oriented investors can buy the stock at current levels, as I think further TBV downside appears limited. However, the current stock price does appear to somewhat reflect this. Should you buy stock in AGNC Investment Corp. right now? Before you buy stock in AGNC Investment Corp., consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and AGNC Investment Corp. wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. AGNC Investment: After Another Tough Quarter, Can the Stock Maintain Its Dividend? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 days ago
- Business
- Yahoo
Despite Some Recent Challenges, This 15%-Yielding Dividend Looks Safe
Key Points AGNC Investment navigated several challenges during the second quarter. The mortgage REIT capitalized on opportunities to grow during the period. The company believes it can continue to pay its monster monthly dividend. 10 stocks we like better than AGNC Investment Corp. › The second quarter got off to a rocky start following the Trump administration's "Liberation Day" tariff announcement in early April. Stocks and other financial assets initially tumbled due to increased uncertainty about how tariffs might impact the economy. However, most financial assets recovered throughout the quarter as the administration ultimately delayed its tariff plan. Agency mortgage-backed securities (MBSes) -- residential mortgage pools protected against default risk by government agencies like -- were the exception as they underperformed. While this negatively impacted AGNC Investment's (NASDAQ: AGNC) results, it did not alter the company's outlook on its 15%-yielding monthly dividend. Navigating a challenging period Interest rate volatility and a sharp negative turn in investor sentiment posed challenges to the mortgage market during the quarter. Those issues weighed on the value of MBS assets. As a result, AGNC Investment reported an economic return of negative 1% in the period, while it posted a comprehensive loss of $0.13 per share. Despite those negative headline numbers, the mortgage REIT navigated the quarter's challenges effectively thanks to its robust risk management and strong liquidity. This allowed AGNC to preserve its portfolio and add assets at attractive levels. Its solid preparation heading into the period allowed the company to sustain its massive monthly dividend despite the volatility. A favorable outlook While the MBS market experienced some turbulence last quarter, it's still an attractive investment market. "We continue to have a favorable outlook for levered and hedged Agency MBS investments," said AGNC Investment CEO Peter Federico in the second-quarter earnings press release. He noted that "mortgage spreads to benchmark rates remain elevated by historical standards and range-bound, an extremely favorable return environment." Further, he remarked that the supply of MBSes is in balance with demand, which should strengthen as anticipated regulatory changes allow banks to increase their MBS investments. AGNC Investment believes these positive market conditions will continue even if the Trump administration makes changes to the status of mortgage agencies Fannie Mae and Freddie Mac. The administration has floated the idea of ending the Federal conservatorship of those entities by taking them public. However, the administration has made it clear that it plans to preserve the pristine credit profile of agency MBSes. AGNC Investment believes this move would be a positive step for the mortgage markets and MBS investments, as it could help lower costs. Meanwhile, despite the recent turbulence in the mortgage market, AGNC continues to earn a high enough return on its MBS investments to cover its cost of capital (its operating costs plus dividend payments). Federico noted on the second-quarter earnings conference call that in the current environment, AGNC is earning a return on equity of around 19%. While that number fluctuates from quarter to quarter, it currently aligns well with its cost of capital, suggesting it can continue to pay its current dividend level. Additionally, the mortgage REIT sold 92.6 million shares of its common stock during the second quarter, raising $799 million in proceeds. It put about half that capital to work in the period by opportunistically investing in MBSes. As it continues to accretively deploy that capital, it will further boost its returns in a way that supports its dividend. AGNC plans to continue seeking accretive opportunities to raise capital and increase its scale, which will help lower its operating costs and therefore, its cost of capital. A higher-risk, high-reward passive income stream AGNC Investment stands out for its massive 15%-yielding monthly dividend, which remains safe even amid recent market turbulence. By seizing opportunities to expand its MBS portfolio during a turbulent period and maintaining its disciplined risk management, AGNC has demonstrated its ability to sustain this high-yield payout. Despite all that, this ultra-high-yield REIT may not be suitable for everyone. It has a higher risk profile that investors must watch closely. However, for those with a higher risk tolerance, it can potentially provide them with a huge reward in the form of its lucrative monthly dividend. Should you buy stock in AGNC Investment Corp. right now? Before you buy stock in AGNC Investment Corp., consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and AGNC Investment Corp. wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $634,627!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,046,799!* Now, it's worth noting Stock Advisor's total average return is 1,037% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Despite Some Recent Challenges, This 15%-Yielding Dividend Looks Safe was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
