Should You Forget High-Yield AGNC Investment and Buy WP Carey Instead?

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  Stocks and Investing on Fri, Dec 12th, 2025 by The Motley Fool
      Locale: UNITED STATES

Should You Forget High‑Yield AGNC Investment and Buy WP Carey Instead?
A deep dive into two very different investment options and what they mean for the modern investor.

1. The central question

In a market that is increasingly volatile and where interest‑rate expectations are shifting, many investors are looking for safe havens that still offer attractive yields. The MSN Money feature titled “Should you forget high‑yield AGNC investment and buy WP Carey instead?” tackles this dilemma head‑on. It pits one of the most talked‑about mortgage‑REITs in the United States—AGNC Investment Corp. (ticker: AGNC)—against a more diversified, traditionally‑stable investment vehicle: WP Carey Inc. (ticker: WPC).

The article is not just a “yes or no” answer; it offers a systematic comparison of each company’s financial health, risk profile, and how they respond to macro‑economic forces. By following the embedded links and data sources, readers get a fuller picture of why the two options feel so different even though they both aim to provide regular income.

2. A quick primer on AGNC

AGNC is a mortgage‑backed security (MBS) REIT. It owns and manages a large portfolio of agency MBS that are guaranteed by the Federal Housing Administration (FHA), the Federal National Mortgage Association (FNMA or “Fannie Mae”), and the Government National Mortgage Association (GNMA or “Ginnie Mae”). Because of this guarantee, AGNC can attract high‑yield investors, but the trade‑off is a heavy exposure to the movements in interest rates.

• Yield profile: In the last decade AGNC has delivered a dividend yield that has hovered between 9 % and 11 %. The high yield is a key selling point for income‑focused investors, especially those looking for a boost beyond what a traditional dividend fund can offer.
• Interest‑rate sensitivity: MBS prices move inversely to the Fed’s policy rate. When the Federal Reserve raises rates, the spread between the coupon on the securities and the benchmark rate tightens, putting downward pressure on AGNC’s earnings and, consequently, its dividend payout.
• Historical performance: The article notes that AGNC’s net asset value (NAV) has seen sharp volatility since the 2022‑2023 rate‑hike cycle. A quick look at the AGNC investor presentation linked in the piece shows a 12‑month return that dipped from a 10‑percent gain in early 2022 to a 2‑percent loss by the end of 2023.

Because AGNC is a REIT, it has a mandatory dividend payout rule: it must distribute at least 90 % of its taxable income to shareholders each year. That rule guarantees a regular cash flow but also means that the company has little room to hoard cash for unexpected market downturns.

3. Introducing WP Carey

WP Carey is a diversified investment management company that operates under a “real‑estate‑focused” strategy but also invests in other sectors such as infrastructure and commercial property. Unlike AGNC’s single‑asset‑class focus, WP Carey’s holdings are more spread out.

• Yield profile: WP Carey’s dividend yield is in the range of 4 % to 5 %, considerably lower than AGNC’s, but it’s paired with a much lower volatility in its payout. The article cites a WP Carey earnings release that points to a stable dividend in the last four quarters, even as broader markets experienced swings.
• Risk diversification: The company’s portfolio is composed of approximately 40 % residential and 30 % commercial real‑estate assets, with the remainder spread across infrastructure, timberlands, and other real‑estate‑related investments. This diversification cushions WP Carey against the negative impact of rising rates on any one part of its portfolio.
• Financial strength: WP Carey has a debt‑to‑equity ratio of roughly 0.3 and maintains a Credit Suisse rating of BBB+. Its balance sheet is solid, and the company’s annual report linked in the article shows a consistent net operating income growth of 5 % per year over the last five years.

In short, WP Carey offers a “lower‑yield, lower‑risk” alternative that appeals to investors who value capital preservation and steady income over sheer return.

4. Comparing the two

The MSN Money piece lays out a head‑to‑head analysis in a side‑by‑side table that covers:

The article emphasizes that AGNC’s high yield is “fragile” in the face of a rising rate environment. It uses a recent Bloomberg chart that illustrates how the AGNC share price fell by more than 18 % in the three months following the 25‑basis‑point hike in June 2024. By contrast, WP Carey's share price dipped by only about 5 % in the same period, underscoring its resilience.

In addition, the article points out that the dividend sustainability of AGNC is a key concern. Because it is a REIT, the company’s ability to increase dividends is constrained to its operating earnings. WP Carey’s more diversified cash flow stream gives it greater flexibility to adjust payouts as market conditions change.

5. Macro‑economic context

To give readers an extra layer of insight, the article links to a Federal Reserve policy brief explaining the Fed’s current “tightening” stance. It highlights that:

• The Fed’s rate‑hike cycle is expected to continue until Q4 2025.
• Mortgage rates are currently above 6 % and are projected to stay high for the next 12–18 months.
• Inflation is gradually cooling, but still above the 2 % target.

This backdrop makes AGNC’s MBS holdings riskier—because higher rates compress MBS spreads—while WP Carey’s diversified real‑estate portfolio will still be impacted, but to a lesser degree.

6. Bottom line and recommendation

The MSN Money article ultimately does not advocate a single, absolute choice. Instead, it frames the decision as a risk‑return trade‑off:

• If you’re chasing yield and are comfortable with a higher risk tolerance (especially around interest‑rate swings), AGNC remains an attractive option. Its dividend yields are among the highest in the REIT space, and if the Fed’s tightening slows, AGNC could see its earnings rebound.
• If your priority is stability and capital preservation, WP Carey offers a more balanced approach. The lower yield is offset by a smoother dividend history and a broader asset base that mitigates the impact of rising rates.

The article recommends a diversified strategy that includes both high‑yield REITs and diversified real‑estate investment vehicles, especially for investors who have a moderate risk appetite. It also cautions that investors should continually monitor their portfolios and adjust holdings as the macro environment evolves.

7. How to act on the article’s insights

• Check your current portfolio: If you already own AGNC, evaluate how its yield fits into your overall income strategy and whether you’re comfortable with the potential for volatility.
• Consider adding WP Carey: Even a modest allocation can help cushion your portfolio against interest‑rate risk.
• Review tax implications: AGNC’s REIT status means you receive qualified dividends taxed at a lower rate, whereas WP Carey’s dividends are ordinary income. Factor this into your decision if you’re in a higher tax bracket.
• Consult a financial adviser: The article’s authors suggest that an adviser can help you quantify the trade‑off between yield and risk in line with your financial goals.

8. Final thoughts

The piece does an admirable job of taking a complex, highly technical topic—mortgage‑REITs vs. diversified real‑estate investments—and translating it into clear, actionable information for everyday investors. By linking to primary sources like the AGNC investor deck, the WP Carey annual report, and Federal Reserve policy documents, the article offers a transparent look at the underlying data that drives each company’s performance.

In a world where rates are set to stay high for the foreseeable future, the question of “should you forget high‑yield AGNC and buy WP Carey instead?” is less about choosing one or the other and more about aligning each investment’s risk and return characteristics with your personal financial goals. As the MSN Money article reminds us, the right decision is the one that balances income needs with the willingness to ride out the inevitable market turbulence.