---
title: "AGNC Investment's More Than 13.5% Yield Just Got a New Headwind From the Fed"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/291056372.md"
description: "AGNC Investment faces a new headwind as the Federal Reserve hints at potential rate hikes due to persistent inflation, contrary to earlier expectations of cuts. This shift pressures Agency MBS values, impacting AGNC's portfolio. Despite this, AGNC maintains its high dividend yield by issuing stock at a premium to book value to fund accretive investments, though the changing rate environment increases risk for income investors."
datetime: "2026-06-28T11:25:51.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/291056372.md)
  - [en](https://longbridge.com/en/news/291056372.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/291056372.md)
---

# AGNC Investment's More Than 13.5% Yield Just Got a New Headwind From the Fed

**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.

![AGNC Investment's logo on a mobile phone.](https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84NzU1NjYvYWduYy1pbnZlc3RtZW50LWNvcnAtbG9nby1vbi1zbWFydHBob25lLXdpdGgtc3RvY2stY2hhcnQtYmFja2dyb3VuZC1hZ25jLmpwZWcmdz0zODQw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

Image source: Getty Images.

## A potential policy shift

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.

This sentiment shift has impacted the Agency MBS market (AGNC Investment's sole focus). CEO Peter Federico stated on the first-quarter conference call that, heading into the year, the market assumption was that there would be about $250 billion of Agency MBS supply, with mortgage rates just below 6%. However, with mortgage rates now in the 6.5% range, MBS supply could be $50 billion to $70 billion lower this year. The higher yields on new MBS put downward pressure on the value of legacy MBS with lower yields. If the Fed does raise rates, mortgage rates would likely rise more, further pressuring MBS values.

Expand

![AGNC Investment Corp. Stock Quote](https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL0FHTkMucG5nJnc9MTI4?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

## NASDAQ: AGNC

AGNC Investment Corp.

Today's Change

(2.59%) $0.28

Current Price

$10.89

### Key Data Points

Market Cap

$12B

Day's Range

$10.59 - $10.90

52wk Range

$9.08 - $12.19

Volume

1.1M

Avg Vol

14.9M

Gross Margin

100.00%

Dividend Yield

13.56%

## Still commanding a premium

This year started positively for the MBS market as the Trump administration focused on reducing interest rate volatility and improving housing affordability. However, the war with Iran turned sentiment negative in March amid increased volatility. This impacted the value of AGNC's MBS portfolio, as its tangible book value declined by 5.6% to $8.38 per share.

However, while its book value declined, the REIT's stock price continued to trade at a premium to book, which it capitalized on by issuing $400 million in new shares during the period. It was able to deploy that capital at a levered return of around 16%, making these new investments accretive compared to its 13.5% dividend yield at the time. With its share price currently above $10.50 apiece, the REIT can continue to sell stock at a premium to its book value to make accretive new investments.

## A higher risk, high-yielding dividend stock

Changes in interest rates impact the value of AGNC Investment's MBS portfolio. The REIT, like most Fed watchers, expected that rates would fall this year, increasing the supply of lower-rate MBS. However, the Fed recently hinted that it might resume rate hikes amid the war-driven inflationary uptick. While that would put more downward pressure on the value of its portfolio, the REIT can still issue stock at a premium to buy higher-yielding MBS, which could enable it to continue maintaining its dividend. Even still, it's a higher risk, high-yielding income stream that income investors might not always be able to bank on in the future.

### Related Stocks

- [AGNC.US](https://longbridge.com/en/quote/AGNC.US.md)
- [AGNCP.US](https://longbridge.com/en/quote/AGNCP.US.md)
- [AGNCO.US](https://longbridge.com/en/quote/AGNCO.US.md)
- [AGNCM.US](https://longbridge.com/en/quote/AGNCM.US.md)
- [AGNCN.US](https://longbridge.com/en/quote/AGNCN.US.md)
- [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md)
- [AGNCZ.US](https://longbridge.com/en/quote/AGNCZ.US.md)
- [AGNCL.US](https://longbridge.com/en/quote/AGNCL.US.md)

## Related News & Research

- [3 Monthly Dividend Stocks for Income Investors Seeking Cash Flow](https://longbridge.com/en/news/290452852.md)
- [It Was a Tale of Two Quarters for AGNC Investment to Start the Year. Is its 13%-Yielding Monthly Dividend at Risk?](https://longbridge.com/en/news/283669362.md)
- [This Dividend Stock Is Up 75% in 2026 and Yields Almost 2%](https://longbridge.com/en/news/290873380.md)
- [US 10-year Treasury yield likely to lack clear trend](https://longbridge.com/en/news/290918530.md)
- [10-Year Treasury Yield Falls to 4.400% — Data Talk](https://longbridge.com/en/news/290734768.md)