Why Dividend Investors Keep Chasing AGNC Investment's 13.7% Yield—And Why They Shouldn't

When screening for income stocks, many portfolio managers get tunnel vision. A headline-grabbing 13.7% dividend yield from AGNC Investment can seem like the holy grail of passive income. Yet behind this eye-catching number lies a far more complicated story about volatility, risk, and what “reliable income” actually means.

Meanwhile, W.P. Carey’s recent dividend reset doesn’t tell you everything. The company’s decision to cut its payout in 2023 was part of a larger strategic pivot that has since positioned it for sustained growth. Understanding the difference between these two approaches reveals why one deserves a closer look and the other deserves skepticism.

The Mortgage REIT Trap: Why Extreme Yields Often Signal Extreme Risk

AGNC Investment operates in the mortgage real estate investment trust (mREIT) space, a sector designed to generate outsized income through a complex web of pooled mortgage securities. The mechanics are straightforward: collect mortgage-backed assets, bundle them, and pass earnings to shareholders. Simple enough—except when it isn’t.

The 13.7% yield reflects the reality that mREITs face constant pressure from shifting interest rates, mortgage prepayment behaviors, and housing market dynamics. What seems like generosity from management is often a symptom of structural volatility. Look at the historical payout pattern, and you’ll notice a troubling trend: dividend cuts have become increasingly common, with payments moving in only one direction over recent years—downward.

For retirees and income-focused investors, this creates a budgeting nightmare. Can you actually plan your expenses around a payment that fluctuates unpredictably? AGNC’s track record suggests the answer is no.

The Property REIT Playbook: Strategic Retreat, then Recovery

W.P. Carey tells a different story. In 2023, after 24 consecutive years of annual dividend increases, the company made a bold move: exit underperforming sectors and reset expectations.

The decision wasn’t born from weakness. Management and the board deliberately divested office properties—a sector facing structural headwinds—and used the proceeds to redeploy capital into industrial, warehouse, and retail assets. The dividend trim was necessary to reflect this portfolio transformation, but it was temporary.

Within a single quarter, W.P. Carey resumed raising its dividend. The company has continued quarterly increases ever since, matching the cadence it maintained pre-cut. This isn’t a company in distress; it’s a company adapting to market realities. By the time third-quarter 2025 earnings were announced, management felt confident enough to raise its full-year guidance.

The 5.5% yield now attached to W.P. Carey represents income backed by a company actively growing its earnings and repositioning for the next cycle.

The Yield Mirage: Why Context Matters More Than Rate

The instinct to compare yields directly—13.7% vs. 5.5%—is understandable but misleading. A high yield without the earnings to support it is a warning label, not a feature.

AGNC’s enormous payout reflects the mathematics of mortgage securitization, where leverage and complexity inflate apparent returns. But complexity breeds fragility. When interest rates move, when prepayment speeds shift, or when economic conditions tighten, the dividend can swing sharply.

W.P. Carey’s lower yield comes with something AGNC struggles to offer: predictability. The company owns tangible assets, operates in sectors with secular demand, and has demonstrated the discipline to adapt its strategy. The dividend cut was medicine, not malady—proof that management prioritizes long-term shareholder value over maintaining a headline rate at all costs.

The Real Choice: Yield Without Stability or Growth With Modesty

Don’t misinterpret this analysis as a blanket rejection of high-yield stocks or automatic approval of all dividend cuts. The point is subtler: context determines character.

AGNC remains a bet on volatile income, structured around financial engineering rather than fundamental business improvement. For investors genuinely dependent on dividend payments to cover living expenses, the risk profile is simply too steep.

W.P. Carey, having taken one strategic reset, has proven it understands the difference between short-term yield and long-term value. The 5.5% payout is modest on its surface but robust in its foundation.

If your goal is income you can actually rely on—not just income that looks impressive in a spreadsheet—the choice becomes clearer.