# AGNC. 20% yield.



## Banalanal (Mar 28, 2011)

Any thoughts on AGNC reit? The interest and principal are backed by U.S. government entities (Fannie, Freddie, and Ginnie).

How risky is this 20% yield?


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## KaeJS (Sep 28, 2010)

Holy ****.

How has it maintained its price and also paid out 20% for 2 years?!


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## Banalanal (Mar 28, 2011)

Also, NLY is one to look at. 16% yield and looks like it's been that way for 10 years.


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## KaeJS (Sep 28, 2010)

Then why arent people buying these?!

NLY looks to change its dividend often, though. There was one quarter where they paid $0.01c/share. That blows.

AGNC looks like it has a more stable dividend.


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## jamesbe (May 8, 2010)

Wow! This is my strategy right now, stable dividend paying stocks in my TFSA. I've got $30k between my wife and I that we were going to put it on the mortgage but it is only 2% while I can blow that away with stable dividends and take the proceeds and lump that on the mortgage.


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## webber22 (Mar 6, 2011)

The risk with AGNC is that US will mess around with the REIT tax rules, especially now with their budget gap. The possibility of the shares falling 50% could become a reality. If you do a search you'll see that the company is issuing shares and diluting. Eventually this will catch up. And someone mentioned the TFSA account, don't forget the 15% withheld for US taxes for the TFSA. Since it's a US stock, there is no dividend tax credit advantage either.


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## KaeJS (Sep 28, 2010)

Thanks, webber.

I had totally forgot all about the US/CA Tax side of things. Hm, suddenly it looks a lot less appealing.


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## Argonaut (Dec 7, 2010)

These mortgage REITs are a bit of a gamble. Take a look at the chart of Chimera (CIM) for one that didn't work out so well. 

Annaly is the only one I would consider, and believe me every dividend investor considers it at least once in their career. It has the best track record and the dividend I feel is the most sustainable of the bunch. Promised low interest rates from the Fed for the next two years is a good sign for them. You just have to pray it hovers around $18 like it has been. If it does for five years you've made your money back in dividends alone.

I sleep easier at night holding RioCan. I mean heck, the building I work in is owned by them. It's like I'm paying myself to pay myself. Or something.


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## KaeJS (Sep 28, 2010)

Argonaut said:


> I sleep easier at night holding RioCan. I mean heck, the building I work in is owned by them. It's like I'm paying myself to pay myself. Or something.


I like my RioCan as well.

And yes, I felt the same way about JE, RCI.B and MCD.

NatGas in my house comes from JE, my phone bill is paid to RCI.B, and MCD is being eaten for lunch! It's like paying yourself with money you've already paid yourself.


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## jamesbe (May 8, 2010)

You just made me feel really good about the grand I just dumped in to JE


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## gibor365 (Apr 1, 2011)

Argonaut said:


> Annaly is the only one I would consider, and believe me every dividend investor considers it at least once in their career.


So far this year I was holding only AGNC, sold it with little gain + 1 dividend payment close to 5%....
AGNC and NLY usually have relatively clear support and resistance level... also usually they go up about 1 months before ex-div day...
I wanted to buy AGNC or NLY before Fed's meeting last week (they were really cheap), but got scared... and after decision to freeze rates AGNC soared 10% in 1 day...
Still I think both are good buys on small dips.....
And yes, you have to hold it in RRSP/LIRA to get full dividends,


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## phrenk (Mar 14, 2011)

I invested maybe 5k earlier last year in one of the mortgage REITs, such as Gibor did and had maybe a return of +10% in rrsp account.

However, as mentioned, for future investments, i would only consider Annally, given its size and track record (it has been publicly traded for 10+years). Many of the mortgage REITs outhere have been in existence only since the credit crisis in 2008 where there were numerous opportunities for REITs with low capital costs.

Also, try looking and understanding their financial statements - they are probably the most puzzling and confusing i have ever seen. It almost reminds me of the non transparency of CDOs in 2007.

Finally, they are able to achieve +15% dividend yield given the high leverage used coupled with high cash on cash coupon returns. If the Fed proceeded to rate increases, many of the mreits would fall in price - although most of them are hedged in one way or the other by matching duration or interest rate type (fix/floating) on the liability side.


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## gibor365 (Apr 1, 2011)

phrenk said:


> If the Fed proceeded to rate increases, many of the mreits would fall in price - although most of them are hedged in one way or the other by matching duration or interest rate type (fix/floating) on the liability side.


Didn't Fed froze rates increase for almost 2 year?!

Yes, NLY probably more stable....but when I was buying , I chose AGNC because only they had good Payout ratio and 5% higher dividends.

Generally, I think in current volatility NLY and AGNC maybe not a bad investment


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