CryptoCurrency
This 14%-Yielding Dividend Has Been Stable for 55 Months in a Row (Can the Streak Continue?)
AGNC Investment (NASDAQ: AGNC) is a prolific dividend stock. The mortgage-focused real estate investment trust (REIT) pays a monthly dividend that currently yields over 14%. That’s more than 10 times higher than the S&P 500 (1.3% yield).
The mortgage REIT has paid its monster dividend for 55 months in a row. That’s impressive, considering the market conditions it has endured over the past few years. With the environment expected to be much more positive in the future, the REIT’s monster dividend looks safe.
AGNC Investment has a very simple strategy. It invests in agency mortgage-backed securities (MBSes), which are pools of residential mortgages protected from default risk by government agencies like Fannie Mae. Because of that, these fixed-income investments generate very low-risk returns.
Agency MBSes also have relatively low returns (mid to high single digits). The mortgage REIT can boost its returns by using leverage (i.e., borrowing money) to buy more MBSes. It makes money on the spread between its borrowing costs and the yield on its MBS investments. The wider the spread, the more money it can make.
AGNC Investment has made enough money to cover its current dividend payment for the past four and a half years. That’s noteworthy because the last few years have been a more challenging period in the MBS market due to the significant surge in interest rates. Higher rates have increased the REIT’s borrowing costs, narrowing its investment spread.
However, conditions have never gotten to the point where the REIT felt it needed to cut its dividend, which is something it has had to do several times in the past:
AGNC Investment CEO Peter Federico commented on the ideal market conditions for the REIT in its third-quarter earnings report. He noted, “AGNC’s return opportunities are most favorable when agency MBS spreads to benchmark rates are wide and stable and interest rates and monetary policy are less volatile.” In other words, stable market conditions are ideal because they provide a lot of visibility into its earnings capability.
For much of the last few years, the Agency MBS market has been more volatile due to all the uncertainty surrounding interest rates. However, with the Federal Reserve recently pivoting its policy from fighting inflation with higher interest rates to a more neutral stance with lower rates, the outlook for the agency MBS market is much better than it has been over the past few years. The REIT believes MBS spreads will stabilize at historically favorable levels over the next one to two years as the Fed slowly cuts rates. That should enable the company to make more than enough money to continue covering its high-yielding dividend.
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UK based foreign exchange brand Travelex has announced that the company has undertaken a major expansion in the UAE, with the launch of 13 new stores across Abu Dhabi and Dubai airports.
At Zayed International Airport, Travelex is doubling its store footprint from seven to 14 stores, including six new on-the-move kiosk (OTM) locations at arrivals baggage, airside departures and pre-immigration, and one new traditional landside store. The new landside store will offer both a cash management service that will enable the airport’s businesses to process cash, as well as traditional consumer cash services, including access to 62 currencies.
Travelex initially entered Zayed International Airport in late 2023 with seven stores and eight ATMs. The new stores reflect the growing passenger demand and customer requirements of the UAE’s newest airport. As a dominant force in the capital’s aviation sector, Zayed International Airport rapidly affirmed itself as a key hub for air travel, solidifying its position as a vital player in the global travel landscape.
At Dubai International (DXB), Travelex is in the process of launching six new stores across all three terminals, including new traditional stores and stores upgraded from OTMS. Two ATMS dispensing AED were also installed at Terminal 3 Arrivals earlier this year. DXB has also seen a considerable post-pandemic growth in pax numbers, reinforcing its status as a leading hub for international travel.
The 13 new stores across Abu Dhabi and Dubai means Travelex will be operating 60 locations across the country. The latest IATA figures show that Middle Eastern airlines saw a 9.6% year-on-year increase in demand for June 2024, while capacity increased 9.4% year-on-year.
Batu Dölay, Managing Director, Travelex Middle East and Türkiye said:
“We’re delighted to be expanding our presence at two of the most exciting and dynamic airports in the world. This investment reflects the growing global reach and passenger numbers of our UAE airport partners, and our commitment to providing even greater access to international travel money than ever before.”
About Travelex
Founded in 1976 Travelex has grown to become one of the market leading specialist providers of foreign exchange products, solutions, and services, operating across the entire value chain of the foreign exchange industry in more than 20 countries. We have developed a growing network of ATMs and stores in some of the world’s top international airports, major transport hubs, premium shopping malls and city centres.
Travelex has built a growing online and mobile foreign exchange platform, and we also process and deliver foreign currency orders for major banks, travel agencies, supermarkets and hotels worldwide. In addition, we source and distribute sizeable quantities of foreign currency banknotes for customers on a wholesale basis – including central banks and international financial institutions. We also offer a range of remittance and international money transfer products around the world.
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