Question: Would you buy in on AGNC?
AGNC its a good dividend paying reit some analysts think its a good invesment while others are down on reits in general and point to this stock as an example #StockCard
Hoda Mehr: It pays +11% dividend. However, the dividend rate has been declining by -6% in the past 3 years (bad sign). And, the stock price growth has been lower than the S&P 500. So what you gain in dividend you’d lose in the value of the shares. What does interest you about it?
John Paul Martin: Keep in mind that AGNC is not a REIT but an mREIT, there’s a difference. It’s a decent DRIP, but you’re not going to get price appreciation, same with any mREIT.
Chris Calabrese: don’t compare this to a traditioanl Equity REIT which invests in real properties and is much safer and less volitile than as John pointed out a MREIT which is a Mortgage REIT. These companies borrow at short term rates and lend at long term rates and collect the spread and are usually leveraged higher than aveage. The yield curve is compressing as aof lately so it becomes more challenging for these companies to make money. They also use derivitaves and swaps and other complicated financial instruments so just be aware of what you are investing in.
Robert Freeman: what impresses me is the short term prospects for great dividend returns. I dont care about the long term prospects since I am just putting savings to work at rates higher than 0.03 that you get in a bank.
Hoda Mehr: Good strategy!
Billy Tb: I love REITs and I don’t care what analysts say. The real estate business isn’t going to disappear. I own SOHO, OHI, NRZ, ABR, and AJX. Until CDs and Bonds reach 7% I will keep investing in them. The great thing is that when the market tanks like today my REITS stay fairly steady.
Hoda Mehr: The concern I have is that with some of these (such as AJX and NRZ) what you gain in dividend you’d lose in the price decline. Doesn’t that bother you?
Billy Tb: No. NRZ has grown 107% in the last 5 years with 12% dividend. AJX nets around 9% dividend and has grown slightly, it has only been around 3 years. I look at these as steady and safe long term investments. My goal is to average a 10% gain yearly via dividends and growth.
Hoda Mehr: Billy Tb I think somewhere your calculations is not right. This is NRZ’s chart in the past five years. If it grows by 100%, anywhere in the past five years, the price should have been lower than 8, so that as of today you get 100% growth. What you ar…See more
Billy Tb: Hoda Mehr I got the 107% from Robinhood. It says it was 7.99 on 5/3/2013. But it looks like their was a reverse split on 10-20-14. So robinhood was wrong. I’ve only recently added a small position. I think REITs are going to make a comeback as volatility increases
Hoda Mehr: Billy Tb No, Robinhood wasn’t wrong. I only went 5 years back. Looks like they had a price bump in early May 2013. And, including the dividends, the stock has overperformed the market.
Hoda Mehr: Assuming you had invested in all 5 on 02/13/2015 (random date), here is what would have happened. Despite dividends, only nRZ and ABR would have been a better investment compared to investing in an index fund. Including the dividends they other three would have lost you money compared to the market.
Billy Tb: Hoda Mehr thanks for the analysis. I think OHI has good long term prospects because of the aging baby boomer population and the fact that many Americans fail to take care of themselves physically. Add a growing population and increasing need for healthcare I look at is a safe play.