American Capital Agency Corp. (AGNC)

[chaudi]

What do you think about this one? Seems like a great time to buy especially with the dollar so high.

[gibor]

"And like Annaly, it’s safe in the knowledge that, Fannie and Freddie guarantee these securities, while some others are backed by the Government National Mortgage Association (Ginnie Mae)."

Read it here: http://dailytradealert.com/2011/01/27/two-relatively-low-risk-stocks-paying-14-5-and-19-5-dividend-yields/

[tojo]

AGNC, along with NLY are US mortgage Reits that I believe offer interesting dividend yields in a fairly overvalued market. As indicated in the link in the previous post they make their money by leveraging up their equity and investing in US Government backed securities. The risk of default to their equity is negligible. However, they are definitely not without risk - and that is if the spread between low short term rates (at what they borrow) vs. what the portfolio is yielding narrows the dividend yields will come down. I also understand that some of these mReits will likely increase their leverage under such circumstances to maintain their yields, so they do have certain tools and contingencies at their disposal. I read somewhere that AGNC is currently 7.5 X leveraged and NLY 6 X leveraged.

There is some fear in the investment community that such large yields are a sign of impending doom (e.g. YLO and yield chasing) and that inflation looms which will increase interest rates. However, my thoughts are that the current low interest rate environment will persist for a while so mReits offer a compelling investment opportunity (along with buying these at historical discounts due to the low US dollar). Nevertheless, do your own DD and don't go overboard with these...

Disclosure: long on NLY, AGNC and IVR

[davext]

I have a small position in AGNC. I'm in it for the long term

[OptsyEagle]

Using cheap US dollars to buy something that earns cheap US dollars is of no financial benefit to you. The only way this helps is if the US dollar starts to go back up after you buy it.

Your comment has been made many times at higher levels where the investor used cheap US dollars just to see them get much cheaper.

[gibor]

Disclosure: long on NLY, AGNC and IVR

When I was searching for high-yield divivdend stock, I chose AGNC as they have the lowest payout ratio 80% and lowest P/E.

[chaudi]

Looks like it's going to take a turn downward. Good stock but maybe not at this price. It's enough for me.:eek:
FOOL (http://www.fool.com/investing/general/2011/05/16/which-stock-falls-first.aspx)

[gibor]

Looks like it's going to take a turn downward. Good stock but maybe not at this price. It's enough for me.:eek:
FOOL (http://www.fool.com/investing/general/2011/05/16/which-stock-falls-first.aspx)

What is it?

AGNC 52wk Range: 24.06 - 30.68 , now $29.64 , so it's 19% above 52 weeks low and 19% yield.

[chaudi]

Are you still bullish? I think NLY is looking the best of these reits. But the housing market and economy is set go down in the US. Won't this stock take a hit? I also notice a lot short action on these stocks.
I'd love to get 20% return, but how safe is it ?

[gibor]

Are you still bullish? I think NLY is looking the best of these reits. But the housing market and economy is set go down in the US. Won't this stock take a hit? I also notice a lot short action on these stocks.
I'd love to get 20% return, but how safe is it ?

I sold AGNC with a little profit (because of the currency fluctuation), mostly quaterly dividend about 5% . Probably will buy it back on pullback, NLY IMO is a buy under 18

[gibor]

Both NLY and AGNC fell hard today (2.3%), NLY to 17.64 , AGNC to 28.90...

Considering that yields now respectedly 15 and 20% and low US$, do you thing it's a good buy?

[Simon_oa]

AGCN results will come out today at 4 pm ...

You might want to wait before buying

[chaudi]

Glad i'd didn't buy this one, looks like a good short about now.