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AGNC Preferred Shares Offer High Yields (9%+) - A Closer Look

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  Published in Stocks and Investing on Monday, January 19th 2026 at 8:52 GMT by Seeking Alpha
      Locales: Delaware, Texas, UNITED STATES

Monday, January 19th, 2026 - In a landscape where reliable income generation is increasingly sought after, investors are continually searching for opportunities that offer both stability and attractive returns. AGNC Investment Corp. (AGNC), a prominent Real Estate Investment Trust (REIT) specializing in agency mortgage-backed securities (MBS), has long been a focal point for income-focused investors. A key component of AGNC's capital structure involves the issuance of preferred shares, which have recently attracted significant attention due to their yields exceeding 9%. This article will delve into three of AGNC's floating-rate preferred shares - AGNCF, AGNCP, and AGNCO - analyzing their characteristics, yields, and associated risks.

AGNC's preferred shares provide a unique avenue for income, leveraging the company's expertise in the MBS market. The floating-rate nature of these shares is particularly noteworthy, as the dividend payments dynamically adjust alongside prevailing interest rates. This contrasts with fixed-rate investments, offering a potentially adaptable income stream. However, understanding the nuances of these shares, including the transition away from LIBOR, is crucial for informed investment decisions.

A Closer Look at the Preferred Shares

• AGNCF: Trading at $24.62 as of January 18, 2026, AGNCF carries a par value of $1,000 and boasts a current yield of 9.12%. Its dividend rate is calculated as 7.20% plus 3-Month LIBOR, currently resulting in an 8.71% dividend rate. It's important to note that LIBOR is being phased out and is now being replaced by the Secured Overnight Financing Rate (SOFR). This transition is a key element to monitor as it will impact future dividend adjustments. AGNCF holds credit ratings of BBB from S&P and Baa2 from Moody's, classifying it as investment grade, but not without risk. Notably, it operates as a fixed-to-floating rate share, initially offering a fixed rate for the first three years before transitioning to a floating rate.

• AGNCP: Similar to AGNCF, AGNCP shares also have a par value of $1,000 and are trading at $23.98 with a current yield of 9.17%. The dividend calculation mirrors AGNCF's: 7.20% + 3-Month LIBOR (currently 8.71%). AGNCP also carries the same credit ratings as AGNCF (BBB from S&P and Baa2 from Moody's). As with AGNCF, it is crucial to understand that the dividend payment is linked to SOFR, not the legacy LIBOR.

• AGNCO: AGNCO is priced at $24.04 with a current yield of 9.09%, also maintaining a $1,000 par value. Its dividend rate structure is identical to AGNCF and AGNCP: 7.20% + 3-Month LIBOR (8.71% currently). This share also shares the same credit ratings (BBB/Baa2). The consistent structure across these three preferred shares simplifies the comparative analysis for potential investors.

Understanding the Risks

While the high yields of AGNC's preferred shares appear attractive, potential investors must acknowledge and assess the inherent risks.

• Interest Rate Risk: Floating-rate shares are inherently linked to interest rate movements. While rising rates are favorable for dividend increases, they can simultaneously depress the market price of the shares. A significant and rapid increase in interest rates could negatively impact the share price, offsetting some of the benefits of higher dividend payments. Conversely, a decrease in rates would reduce the dividend.

• Credit Risk: Although AGNC holds investment-grade credit ratings, no investment is entirely risk-free. A deterioration in AGNC's financial health could jeopardize its ability to meet its preferred share obligations. While the BBB/Baa2 ratings suggest a relatively low risk of default, ongoing monitoring of AGNC's financial performance is prudent.

• LIBOR Transition Risk: The ongoing transition from LIBOR to SOFR introduces an element of uncertainty. While the mechanics of the transition are intended to be seamless, any unforeseen complications or discrepancies in the application of SOFR could impact dividend rates and investor returns.

Investment Considerations & Conclusion

AGNC Investment Corp.'s floating-rate preferred shares offer an intriguing avenue for income-seeking investors, particularly in a climate characterized by fluctuating interest rates. The yields above 9% represent a potentially attractive alternative to traditional fixed-income investments like bonds. However, prospective investors must thoroughly evaluate their risk tolerance and financial goals before committing capital. A deep understanding of the floating-rate nature of these shares, the ongoing transition away from LIBOR, and the associated credit and interest rate risks is paramount to making a sound investment decision. Further research into AGNC's financials and the prevailing interest rate environment is strongly encouraged.