AGNC Investment (AGNC 1.23%) recently closed the books on an exceptional year. The real estate investment trust (REIT) capitalized on a strong investment environment to generate robust returns for its investors. That enabled it to continue paying its more than 12%-yielding monthly dividend.
The mortgage REIT believes 2026 could be just as good. That suggests it should be able to continue paying its monster monthly dividend.
Image source: Getty Images.
A strong year
"The fourth quarter of 2025 capped an exceptional year for AGNC shareholders," stated CEO Peter Federico in the fourth-quarter earnings press release. He noted that the REIT "generated an impressive economic return on tangible common equity of 22.7%" last year. Even better, it produced a 34.8% total stock return last year with dividends reinvested, almost double the S&P 500's return.
The company's strategy of investing solely in Agency MBS (mortgage-backed securities guaranteed against credit losses by government agencies such as Fannie Mae) paid big dividends last year. Federico noted that "Agency MBS was the best performing domestic fixed income asset class in the fourth quarter and produced a total return for the year of 8.6%, the best full-year return for Agency MBS since 2002." These investments benefited from the Federal Reserve's decision to reduce rates, lower uncertainty and risks associated with a potential reform of government-sponsored entities like Fannie Mae, and improved housing affordability.
NASDAQ: AGNC
Key Data Points
Strong momentum in early 2026
The themes driving strong Agency MBS performance last year remain in place in early 2026. Interest rates are lower, and Agency MBS spread volatility remains in place, both of which provide a constructive investment environment for the mortgage REIT. Additionally, the REIT sees more positives ahead. Fannie Mae and Freddie Mac recently purchased Agency MBS in an effort to lower mortgage rates. Additionally, the Trump administration and the Federal Reserve could take further steps to bolster the mortgage market. These dynamics drive AGNC's optimistic view on the Agency MBS market this year.
The mortgage REIT is in a strong position to capitalize on this market. It issued over $350 million in new shares during the fourth quarter, providing it with additional capital to pursue new investment opportunities. With a strong liquidity position and a positive market environment, AGNC believes it can continue to generate favorable returns, including maintaining its high-yielding dividend.
The dividend looks secure
AGNC Investment isn't like most other REITs. It doesn't generate stable cash flow backed by long-term leases. The mortgage REIT makes money investing in Agency MBS. That strategy can be very lucrative, which was the case last year. It should remain highly profitable in 2026, given the current investment backdrop. As a result, its big-time dividend looks secure. However, investors do need to monitor this REIT's financial results more closely to ensure it can maintain its monster dividend. As such, it's a higher-risk, higher-reward income stream that might not be suitable for those seeking a bankable dividend.
