AGNC Investment (AGNC) is back in focus after fresh analyst commentary highlighted changing conditions in the mortgage finance sector, with falling mortgage rates and tighter agency spreads drawing renewed attention to the stock’s high dividend profile.

See our latest analysis for AGNC Investment.

Those comments have come at a time when momentum in AGNC Investment’s share price has been building, with a 90 day share price return of 9.41% and a 1 year total shareholder return of 35.94%. This reflects how investors have recently been reassessing both its income potential and risk profile.

If AGNC has you thinking more broadly about income and risk, it could be worth seeing how other high payout names stack up. You could use pharma stocks with solid dividends as a starting point.

With AGNC trading at US$10.93 against an analyst target of US$10.30 and an estimated intrinsic discount of 52%, the key question is whether you are looking at real value or a market that is already pricing in better days ahead.

The most followed narrative puts AGNC Investment’s fair value at US$9.83, below the last close of US$10.93, framing current pricing as somewhat rich.

The supply and demand outlook for Agency MBS is expected to be well balanced in 2025, with potential positive surprises from bank demand due to less onerous regulation, which could support revenue growth and stabilization of earnings by maintaining attractive investment yields. The company plans to leverage current Agency spreads within a well-defined trading range. This may offer potentially attractive returns for both levered and unlevered investors and could positively impact AGNC’s net margins if spreads remain stable.

Read the complete narrative.

Want to see what is driving that higher fair value line? The narrative leans heavily on rapid top line growth, rising profitability and a lower future earnings multiple.

Result: Fair Value of $9.83 (OVERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, you still need to weigh up risks like interest rate volatility and policy uncertainty, which could pressure spreads, returns on Agency MBS, and overall earnings.

Find out about the key risks to this AGNC Investment narrative.

While the consensus narrative sees AGNC Investment as 11.2% overvalued at US$10.93 versus a US$9.83 fair value, the SWS DCF model points in the opposite direction. It suggests a fair value of US$22.96, with the current price at a 52.4% discount, raising a very different question for you to consider.