How to choose high-yield REITs? The difference between these two is so large.

It is said that one should allocate to high-yield assets, but a higher yield does not necessarily mean it is safer.

AGNC (NASDAQ: AGNC) offers a dividend yield of over 14%, which is quite pleasing. But this guy plays aggressively—only investing in mortgage-backed securities ( MBS ), using leverage to boost returns. This means that once the market fluctuates, things can get tough. As it turns out: in 2014, it paid $0.22 per share, and by 2020 it had been cut down to $0.12 per share, with multiple reductions in dividends.

Starwood Property Trust (NYSE: STWD) offers a nearly 11% dividend, which may seem a bit low, but it has much stronger stability. Its investment portfolio is super diversified: commercial real estate loans (53%), residential loans (9%), infrastructure loans (10%), and it also directly holds assets like medical office buildings and affordable housing (19%). This year, it also invested $2.2 billion to acquire a fund, locking in a 17-year lease term. The result? It hasn't cut its dividend in over 10 years.

The core difference is simple: AGNC is a high-risk, high-reward bet, while Starwood is a stable cash flow under diversification. If you just want your cash to sit and earn interest, Starwood is more solid. If you pursue aggressive returns and can withstand volatility, AGNC is a different story.

View Original
This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.
  • Reward
  • Comment
  • Repost
  • Share
Comment
Add a comment
Add a comment
No comments
  • Pin