Realty Income and AGNC Investment are both real estate investment trusts. AGNC Investment has a 13% yield, while Realty Income’s yield is a much lower 5.6%. For investors looking to rely on dividends for income, caution is advised.
Realty Income is a large property-owning real estate investment trust that focuses on single-tenant properties leased out using a net lease structure. With over 15,500 properties in its portfolio, Realty Income has a low-risk approach despite the high risk of individual properties. The company also boasts an investment-grade-rated balance sheet and diverse geographic exposure.
On the other hand, AGNC Investment’s business model involves owning mortgages pooled into bond-like investments. This focus on mortgage securities leads to a volatile dividend, which has been in decline for several years. Although AGNC Investment achieves a good total return, reinvesting dividends is crucial for long-term success.
When comparing the two, Realty Income’s 5.6% dividend yield seems more suitable for income needs than AGNC Investment’s higher yield. Realty Income has a history of annually increasing dividends for 30 consecutive years, making it a stable choice for dividend investors.
It’s important for investors to understand the business supporting a high dividend yield, as the highest yields often come with significant risks. While AGNC Investment may offer higher returns, the volatility of its dividend may not be suitable for those seeking a reliable income stream.
Before investing in AGNC Investment Corp., it’s worth considering other options. The Motley Fool Stock Advisor team has identified 10 stocks they believe could offer significant returns, and AGNC Investment Corp. is not among them. By diversifying and considering stable options like Realty Income, investors can build a more secure income stream for the long term.
