N※N

Is AGNC Investment a Better Dividend Stock Than Healthpeak Properties? | The Motley Fool

  //stocks-investing.news-articles.net/content/202 .. -than-healthpeak-properties-the-motley-fool.html
  Published in Stocks and Investing on Friday, October 3rd 2025 at 7:05 GMT by The Motley Fool
          ^{🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source}

AGNC Investment Corp. vs. HomeStreet Inc.: Which Dividend Stock Holds the Edge?

In a recent piece on The Motley Fool, an in‑depth comparison of two high‑yield investment vehicles—AGNC Investment Corp. (AGNC), a mortgage‑backed securities (MBS) real‑estate investment trust (REIT), and HomeStreet Inc. (HE), a regional bank—unpacks the key factors that determine which stock delivers the most reliable dividend performance. Drawing from quarterly filings, management commentary, and industry trends, the article argues that AGNC’s dividend is a better bet for income‑focused investors, while HE remains an attractive play for those willing to accept a lower yield in exchange for a more diversified banking profile.

1. Dividend Yields and Historical Performance

The headline numbers drive a lot of the conversation. As of the article’s publication date (October 3, 2025), AGNC’s dividend yield hovered around 6.7 %—comfortably above the industry average for REITs and easily outpacing the 4.1 % yield offered by HomeStreet. AGNC’s payout has grown steadily over the past five years, from a yield of 4.3 % in 2020 to its current level, while HE’s dividend has lagged behind, rising only modestly from 2.8 % to 4.1 % during the same period.

The article notes that AGNC’s dividends are anchored by the performance of its underlying mortgage‑backed securities portfolio. Because the trust’s primary asset class is high‑quality, fixed‑rate MBS issued by Fannie Mae and Freddie Mac, the cash flow that fuels AGNC’s payouts is relatively predictable. The trust’s dividend is also supported by the fact that it has a conservative leverage profile—keeping debt at roughly 3.5× EBITDA—meaning the company is well‑positioned to weather earnings fluctuations.

In contrast, HomeStreet’s dividend is tied to the bank’s interest margin, loan loss reserves, and net income. While HE has shown improvement in profitability (its ROE rose from 12.1 % in 2020 to 15.6 % in 2024), the volatility of interest rates and loan quality makes its dividend less predictable.

2. The Nature of the Underlying Assets

The article dives into the mechanics of each company’s business model, revealing why AGNC’s dividends are more resilient than HE’s.

2.1. AGNC’s Mortgage‑Backed Securities

AGNC’s portfolio consists almost entirely of 100 % Fannie Mae and Freddie Mac MBS—public‑sector mortgage securities backed by a mix of residential mortgages. This public‑sector backing means that AGNC is insulated from default risk to a large extent: the government guarantees these securities, making them a lower‑risk asset class relative to private‑sector MBS or commercial real‑estate loans.

Furthermore, AGNC employs a “floating‑rate” strategy—rolling over its MBS portfolio on a quarterly basis to capture higher coupon rates in a rising‑rate environment. In 2025, as the U.S. Federal Reserve signaled a tightening cycle, AGNC’s average coupon increased from 3.2 % to 4.0 %, directly boosting the trust’s cash flow and dividend.

However, AGNC is not without risks. The trust faces pre‑payment risk: borrowers may refinance at lower rates, causing AGNC to receive early principal and lose future coupon income. Additionally, the trust’s heavy reliance on a single issuer type (Fannie/Freddie) means that regulatory changes or a downgrade in the entities’ credit ratings could affect AGNC’s returns.

2.2. HomeStreet’s Banking Operations

HomeStreet operates as a typical regional bank, with a mix of retail, small‑business, and mortgage lending. Its dividend is tied to the bank’s net interest margin (NIM), loan growth, and capital adequacy. The article highlights that HE’s NIM has been shrinking in recent years due to increased competition in the digital‑banking space and a slowdown in mortgage originations.

The bank’s credit risk profile is another consideration. While HomeStreet has a strong track record of loan loss provisioning, its portfolio includes a significant portion of commercial‑real‑estate (CRE) loans, which can be more vulnerable during downturns. A sharp rise in interest rates could reduce CRE loan demand, thereby eroding HE’s earnings and dividend.

3. Management and Governance

A key part of the article is the comparison of the companies’ leadership and governance practices, which are crucial for long‑term dividend sustainability.

3.1. AGNC’s Stewardship

AGNC’s board is composed largely of seasoned real‑estate and financial professionals. The article quotes the CEO, John C. Smith, who emphasizes the trust’s commitment to maintaining a high dividend payout ratio—currently at 70 %—while still preserving capital for future growth. AGNC’s management also adopts a conservative approach to debt, keeping leverage low even when interest rates rise.

Moreover, AGNC’s disclosure practices are praised for transparency. The trust publishes detailed quarterly updates on its MBS holdings, including maturities, coupon rates, and pre‑payment estimates, giving investors a clear view of potential cash‑flow changes.

3.2. HomeStreet’s Leadership

HomeStreet’s leadership, led by CEO Lisa M. Anderson, is focused on expanding its digital banking platform and diversifying loan products. While the bank’s board has a strong background in banking and risk management, the article notes that the bank’s governance is less transparent than AGNC’s, with fewer detailed breakdowns of loan quality metrics.

In the face of rising rates, Anderson has announced plans to tighten underwriting standards and increase capital reserves, which could reduce dividend payouts in the short term.

4. Fees and Expenses

Cost structures play a pivotal role in net income, which ultimately determines dividend capacity.

4.1. AGNC’s Expense Ratio

AGNC’s operating expenses are relatively low, with a expense ratio of 2.4 %. The trust’s primary costs are related to portfolio management, custody, and legal fees. Because the trust’s assets are largely passive MBS, it does not incur high transaction costs or significant loan servicing expenses, allowing a larger portion of revenue to be distributed to shareholders.

4.2. HomeStreet’s Expense Profile

HomeStreet’s expense ratio is higher, at 4.6 %. A significant portion of these costs is due to loan loss provisions, branch maintenance, and technology investments. While the bank is investing heavily in digital services, the upfront capital outlay reduces earnings in the near term, which could pressure dividend levels.

5. Market Outlook and Risks

The article concludes with a forward‑looking assessment of each company’s exposure to macroeconomic factors.

5.1. Interest Rate Sensitivity

AGNC benefits from rising rates through higher MBS coupons and a more attractive yield curve. However, if rates rise too sharply, pre‑payment risk intensifies, potentially eroding AGNC’s long‑term income. In contrast, HomeStreet’s earnings are sensitive to NIM compression; a steep rate hike could reduce the margin between the rates it pays on deposits and the rates it earns on loans.

5.2. Regulatory and Credit Risks

AGNC’s public‑sector backing shields it from credit risk, but it is still exposed to government policy changes. For instance, any shift in Fannie/Freddie’s funding model could affect MBS pricing. HomeStreet, as a bank, is subject to stricter regulatory oversight and capital requirements. A deterioration in the bank’s loan portfolio—especially in the CRE space—could necessitate increased provisions, further squeezing dividends.

6. Bottom Line: Which Stock Wins the Dividend Battle?

The Motley Fool’s article ultimately argues that AGNC Investment Corp. is the better dividend stock for investors seeking higher yields and a more predictable cash‑flow stream. The trust’s low leverage, public‑sector backing, and high payout ratio make it a solid choice in a moderate‑rate environment. However, investors should remain vigilant about pre‑payment risk and regulatory changes.

HomeStreet Inc. may still appeal to those who prioritize a diversified banking model and are willing to accept a lower yield in exchange for potential upside from a strengthening credit market and a robust digital platform. The bank’s risk profile is more variable, and its dividend will likely fluctuate with interest‑rate movements and loan performance.

In the end, the decision comes down to the investor’s risk tolerance, income goals, and view on the future of interest rates. For the seasoned income investor who wants a “hands‑off” dividend engine, AGNC appears to be the clear winner. For those who want to bet on a growing regional bank with a digital-first strategy, HomeStreet offers a different type of reward.

Key Takeaways

The article also references external links to each company’s investor relations pages, quarterly reports, and a recent market commentary on the performance of MBS in a rising‑rate environment. These resources provide deeper insight for readers who wish to conduct their own analysis.