Have you heard the news saying, “Is AGNC Going Out Of Business 2024?”. Commercial real estate has been hit hard in recent years, which is witnessed by investors in publicly traded real estate trusts (REITs).
Many investors saw their investments crushed first by the pandemic and then by the rising interest rate. One such firm that was clearly not immune to all these issues is AGNC Investment Corp.
And now, the time has come for the company to close its business; at least, this is what its investors are saying. However, many companies struggle, and it doesn’t necessarily mean that it is closing its entire empire.
So, to clear these allegations of AGNC closure, let’s begin our guide to understand what is happening with AGNC.
About AGNC Investment Corp.
AGNC Investment Corp. operates as a real estate investment trust. It deals in commercial and residential-backed government mortgages. The company was founded in May 2008, in the midst of the Great Financial Crisis.
It was founded when the owners of the company saw an opportunity to create a best-in-class Agency MBS investor with a different approach.
The firm’s investment consists of residential mortgage pass-through securities and collateralized mortgage obligations.
It also invests in other types of mortgage and mortgage-related residential and commercial mortgage-backed securities where repayment of interest principal and interest is not guaranteed by GSE or the U.S. government Agency.
Is AGNC Going Out Of Business?
There’s no lying that AGNC has been through a tough time these past years but this doesn’t mean that it is going out of business in 2024.
AGNC Investment finished strongly in 2023. The company generated $0.30 per share in comprehensive income for the full year. Moreover, according to the reports of Macroaxis, the threat of distress of AGNC Investment is below 1%.
This means that it is very unlikely for the company to encounter any financial distress in the next two years.
What Is The Financial Position Of AGNC?
Balance Sheet Of AGNC
| 2022 | 2021 | 2020 | |
|---|---|---|---|
| Total Assets | 51,748,000 | 68,149,000 | 81,817,000 |
| Total Liability | 43,878,000 | 57,858,000 | 70,738,000 |
| Total Equity | 7,870,000 | 10,291,000 | 11,079,000 |
| Preferred Stock Equity | 1,634,000 | 1,489,000 | 1,489,000 |
| Common Stock Equity | 6,236,000 | 8,802,000 | 9,590,000 |
| Net Tangible Assets | 7,344,000 | 9,765,000 | 10,553,000 |
| Invested Capital | 6,331,000 | 8,928,000 | 9,767,000 |
| Tangible Book Value | 5,710,000 | 8,276,000 | 9,064,000 |
| Total Debt | 95,000 | 126,000 | 177,000 |
| Shared Issued | 574,600 | 522,200 | 539,500 |
Cash Flow Statement
| 2022 | 2021 | 2020 | |
|---|---|---|---|
| Operating Cash Flow | 1,013,000 | 1,540,000 | 1,747,000 |
| Investing Cash Flow | 11,188,000 | 3,836,000 | 36,525,000 |
| Financing Cash Flow | -11,392,000 | -6,175,000 | -37,230,000 |
| End Cash Position | 2,334,000 | 1,525,000 | 2,324,000 |
Income Statement
| 2022 | 2021 | 2020 | |
|---|---|---|---|
| Total Revenue | -1,116,000 | 837,000 | -173,000 |
| Pretax Income | -1,190,000 | 749,000 | -266,000 |
| Basic EPS | -2.41 | 1.23 | 0.66 |
| Basic Average Shares | 537,000 | 528,100 | 551,600 |
| Normalized Income | -1,190,000 | 749,000 | -266,000 |
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Who Are The Top Shareholders Of AGNC Investment Corp.?
| Holder | Shares |
|---|---|
| Vanguard Group Inc | 57,347,540 |
| Blackrock Inc | 31,825,119 |
| State Street Corporation | 15,397,370 |
| Geode Capital Management LLC | 9,186,820 |
| Allspring Global Investments Holdings, LLC | 7,682,998 |
| ClearBridge Investments, LLC | 7,301,298 |
| Equity Investment Corp | 6,343,975 |
Who Are The Top Mutual Fund Holders Of AGNC Investment Corp.?
| Holder | Shares |
|---|---|
| Vanguard Total Stock Market Index Fund | 18,899,809 |
| Vanguard Small-Cap Index Fund | 15,594,292 |
| Vanguard Small-Cap Value Index Fund | 10,909,268 |
| Vanguard Extended Market Index Fund | 8,480,059 |
| iShare Mortgage Real Estate ETF | 6,289,976 |
| Allspring Special Small Cap Value Fund | 5,529,842 |
| Fidelity Extended Market Index Fund | 2,670,794 |
Should You Invest In AGNC Now?
There’s a lot going on with AGNC Investment Corp. It has a massive 14.4% dividend yield. However, despite the fact that AGNC finished 2023 on a positive note, most investors don’t want to buy or hold AGNC Investment.
According to the experts, there are 2 major issues with the stock. The first is that the company is a mortgage REIT, which is a bit more complicated than the traditional property-owning REIT.
Simply put, the terrible dividend track record of AGNC Investment is what keeps most of the small investors from buying it. However, AGNC isn’t a bad REIT; it’s just suitable for specialized types of investors.
So unless you are that specialized type of investor, you should refrain from buying or holding the AGNC Investment. If you have already bought it, you should consider selling it.
Conclusion
The answer to “Is AGNC Going Out Of Business 2024?” is a bit complicated as the company has been dealing with a rough time lately. However, it ended 2023 strongly, but still the stock is not for small investors. It is only for the specialized types of investors.
But with its headwinds now appearing to fade, its payout seems much safer. However, it’s still a riskier dividend stock, which income investors must be comfortable with before adding it to their portfolio.
FAQs
Is AGNC a safe dividend?
AGNC is a higher-risk dividend stock. It focuses on investing in low-risk agency-backed MSBes. It uses leverage to boost its return and ability to pay the dividend. However, this leverage increases its risk.
Is AGNC in debt?
AGNC Investment has a total shareholder equity of $8.3 billion and a total debt of $50.9 billion.
What is the long-term forecast for AGNC?
According to the reports on the internet, the value of AGNC Investment shares will rise 7.45%. It will reach $10.54 per share by February 2024.
