American Capital Agency Corp. (AGNC)’s CEO Is Buying. Should You?

Getting your juices flowing
Of course, what most investors like about mREITs is their dividend. American Capital’s dividend yields almost 16%, pretty much leading the industry, while Annaly’s is just under 12%, similar to what Chimera Investment Corporation (NYSE:CIM) offers. Others like ARMOUR Residential REIT, Inc. (NYSE:ARR) are also on the high side at 14.5%, and though Capstead Mortgage Corporation (NYSE:CMO)‘s yield is under 10%, it’s still a juicy payout in comparison to other dividend paying stocks.

Yet chasing yield is a dangerous pursuit because investors must also determine whether the dividend is sustainable. REITs that took on increasing amounts of leverage to juice their returns suddenly had to preserve capital, and some like Annaly and Chimera Investment, were forced to cut their dividends, sometimes several times.

AGNC Dividend data by YCharts.

All-American choice
Because of its historically conservative operation, Annaly has often been the preferred choice of investors, but American Capital Agency has proven itself capable of navigating the churning waters. Even with its stock moving off the lows it hit late last year as industry conditions improved, I’m inclined to agree with CEO Wilkus that there’s additional room for growth in this particular mortgage REIT.

I’ve rated American Capital to outperform the broad indexes on Motley Fool CAPS as the CAPScall holds me accountable for my opinions here, but tell me in the comments section below if you agree this mREIT will continue riding higher.

The article American Capital Agency’s CEO Is Buying. Should You? originally appeared on Fool.com and is written by Rich Duprey.

Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool owns shares of Annaly Capital Management.

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