Are Mortgage REITs Income Machines or Capital Destroyers? Here's How to Tell the Difference.
Key PointsMortgage real estate investment trusts (REITs) are a complex niche of the broader REIT sector.
AGNC Investment, a mortgage real estate investment trust (mREIT), boasts a substantial 12% dividend yield. This yield has consistently remained above 10% throughout the company's existence as a publicly-traded entity. Given that investors typically anticipate an average return of around 10% from the market, AGNC Investment's yield may appear excessively attractive, potentially signaling a potential risk.
However, the company has proven to be a reputable player in the mREIT sector. Its stock has delivered impressive total returns since its initial public offering, even surpassing the S&P 500 index, which is a remarkable achievement, especially when accounting for reinvested dividends.
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