AGNC book value surges 7.2% as mortgage REIT maintains dividend
Agency MBS spreads at historically wide levels create compelling opportunities heading into 2026
AGNC Investment Corp. reported mixed fourth-quarter results, with tangible book value climbing 7.2% to $8.88 per share while the mortgage real estate investment trust maintained its monthly dividend of $0.12 per share, signaling confidence in its income-generating ability heading into 2026.
The Bethesda, Maryland-based company, which invests primarily in agency mortgage-backed securities, delivered tangible net book value growth from $8.83 in the third quarter, driven by favorable spread dynamics in the agency MBS market. The economic return of 11.6% demonstrates the effectiveness of AGNC's leveraged investment strategy during a period of market volatility.
Management expressed optimism about the outlook for agency MBS in 2026, noting that spreads remain historically wide versus swaps and Treasuries, creating what the company described as compelling return opportunities. AGNC reduced its leverage ratio to 7.2x from 7.6x in the prior quarter, a move that positions the company to navigate potential market fluctuations with greater flexibility.
The decision to maintain the dividend, which equates to an annualized yield of approximately 12.2% at current share levels, comes despite reported quarterly revenue of $944 million. The stock, which trades at $11.80, has gained roughly 10% since the beginning of the year and is approaching its 52-week high of $11.93, though it remains below the average analyst target price of $10.94.
"We anticipate persistent near-term volatility in the market but maintain a very favorable outlook for agency Mortgage-Backed Securities for 2026," AGNC management stated, highlighting the unprecedented swap spread environment and the potential for a more balanced hedge mix between swap-based and treasury-based instruments as conditions evolve.
The broader mREIT sector is facing a more positive outlook in 2026 as the Federal Reserve signals potential rate cuts, which could decrease borrowing costs for mortgage REITs and reduce delinquency rates in certain mortgage segments. Forecasters predict the average 30-year fixed mortgage rate could fall below 6%, with some projections calling for rates to reach 5.5% by the third quarter.
However, the unpredictable nature of interest rate changes remains a key risk for mREITs, given their business model relies heavily on leverage. AGNC's plan to focus on prepayment protection and adopt a measured approach to deploying new assets reflects this cautious stance even as it identifies opportunities in the current market environment.
With 14 analysts covering the stock—four rating it a strong buy, four a buy, and six a hold—the market appears divided on AGNC's near-term trajectory. The company's ability to sustain its dividend while growing book value in a volatile rate environment will be a key focus for investors monitoring the mortgage finance sector throughout 2026.