AGNC Investment's More Than 13.5% Yield Just Got a New Headwind From the Fed
Yahoo Finance ·
AGNC Investment ( AGNC +2.59% ) pays a very lucrative monthly dividend. The real estate investment trust (REIT) yields over 13.5%. That's more than 10 times higher than the S&P 500 's 1.1% yield. The mortgage REIT has maintained its monthly dividend since resetting the level in 2020. However, that could be harder to do after the Federal Reserve recently hinted that it might start raising rates instead of lowering them. Here is how this potential headwind could impact its dividend. The Federal Reserve has been slowly reducing the Federal Funds Rate since September 2024. It had lowered that key borrowing rate by 175 basis points by the end of last year to a range of 3.5% to 3.75%. Most Fed watchers anticipated that it would continue lowering rates this year, likely moving the rate closer to 3% by year's end. However, the Fed has stood pat so far this year amid the war in Iran, which has put upward pressure on inflation. Core inflation, the Fed's preferred measurement, reached 3.4% last month, its highest reading since October 2023. As a result, the Fed has removed key language from its policy statement that indicated a bias toward future rate cuts, while hinting at the possibility of hikes.
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