Thursday, August 26, 2010

Starting American Capital Agency

Market is down so much, I just had to start buying. But nothing on the shopping list hit my price target yet (yes, I am a cheap bastard, especially when buying stocks). So I decided to invest in a high yield REIT: American Capital Agency (AGNC). I have one REIT in my portfolio already: Annaly (NLY), which has huge dividend, 15%. It can't get any better, right? Wrong! AGNC yields 20%! I bought it yesterday. Company has the same model as Annaly: borrowing money for cheap and buying mortgage obligations backed by Fanny Mae and Freddy Mac. Current sharp drop of debt yields should be beneficial for both companies. I don't expect growth from this stock, it falls into "Slow growers/high yield" category. Honestly, 20% yield is all you need from an investment. Boring though, but I can live with it.

Full disclosure: at the time of publication author had long positions in AGNC and NLY and no positions in other stocks mentioned. Positions can change any time.

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