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AGNC Investment Cuts Its Dividend by 25%

By Eric Volkman - Apr 9, 2020 at 5:22PM

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The mREIT's next payout will be $0.12 per share.

AGNC Investment (AGNC 0.41%) is joining a growing crowd of financial services companies cutting or even eliminating their dividends. On Thursday, the mortgage real estate investment trust (mREIT) declared that its next monthly payout will be $0.12 per share, down 25% from the $0.16 per share it distributed Thursday.

In the press release announcing the new payout, the company said that the cut was "[c]onsistent with the decline in AGNC's book value during the first quarter of 2020 stemming from the financial market dislocations associated with the COVID-19 pandemic."

Small toy house next to stacks of coins a clock and a small money bag.

Image source: Getty Images.

In a recent update, AGNC said that as of late March, its tangible net book value per share had fallen by 25% to 30%. This was due to significant volatility in the market for agency mortgage-backed securities.

AGNC believes that -- buttressed by supporting from the Federal Reserve -- the market has been improving since the beginning of the second quarter.

Reducing its payout "provides the Company greater flexibility to take advantage of attractive investment opportunities presented by the current environment and to reinvest earnings in excess of our dividend back into our business over time," AGNC added.

Judging by the stock's performance on Thursday, investors agree. The shares rose by 8.3%, well exceeding the gains of many top stocks and the main equity indexes.

AGNC's upcoming monthly dividend would yield 11.8% at Thursday's closing share price. It is to be paid on May 11 to shareholders of record as of April 30.

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