[quote=AN]desmond, I agree. timing is everything. It’s different if you buy it last year vs if you buy it this year. This is also a small fraction of my total portfolio. You have to do your own research. There’s no safe bet in the market.
flu, I didn’t buy AGNC solely for its dividend. I was looking to invest in REIT and AGNC looks the best to me at the time with the combination of appreciation and dividend. Because they’re a REIT, they have to return 9x% back as dividend. So, I’m expecting RE to recover, so AGNC seems like a good idea. But like I said, it’s still a small portion of my total portfolio.[/quote]
AGNC is a high leverage play. If they are right about their investments it should have a decent return, if they’re wrong it’s a zero. It’s at least a 10 to 1 leverage play. They have 51 billion in liabilities, 54 billion in assets and 2 billion in cash. If the value of their assets drops by 10% they are bankrupt.
They also don’t have a long term history of big dividends either. Cash flow in 2009 was 118 million, 2010 was 288 million and 2011 was 770 million. So just 3 years ago the dividend was 1/7th of today’s and their return of investment is around 1%. 770 million cash flow on assets of 54 billion.
