AGNC

AGNC is a leveraged agency mortgage REIT that delivered a strong FY2025: net income nearly doubled to $1.67B (+93.5%), diluted EPS rose 58.1% to $1.47, and the MD&A reports a 22.7% economic return on tangible common equity (up from 13.2% in 2024) as net interest income recovered to $675M from just $18M. The engine is the spread between asset yields (4.84% GAAP interest income) and financing/hedging costs, amplified by ~8x leverage; when spreads are favorable and book value holds, the result is a high-teens-to-20%+ total return. Tangible net book value per share rose to $8.88 from $8.41, and the company maintained its $1.44/share dividend, paying out $1.60B (+29.0% in total dollars on a larger share count).

The structural caveats are inherent to the model. Leverage is 8.29x liabilities/equity (7.2:1 'at risk' on a tangible basis), so book value is highly sensitive to interest-rate and MBS-spread moves — the 10-K details duration (0.4-year gap), negative convexity, and prepayment risk that can blow through hedges. Net income available to common is also reduced by $161M of preferred dividends. And the share count grew 23.1% as AGNC issued equity to grow the portfolio (total assets +30.7% to $115B); accretive only if issued near or above book, dilutive otherwise.