Warren Buffett Says 'When It Rains Gold, Put Out The Bucket' And This High Yield Investment Is Making It Rain

Benzinga04-26

Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. In his 2016 letter to Berkshire Hathaway shareholders, legendary investor Warren Buffett wrote, “...

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When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons.” According to Buffett’s sage advice, now might be the perfect time to invest in high-yield assets while interest rates remain elevated.One popular high-yield stock that has caught the eye of income-hungry investors is AGNC Investment Corp . With a jaw-dropping dividend yield of 15.38%, it’s easy to see why. However, a closer look at AGNC’s performance reveals some notable risks.The Risks of Chasing Yield: AGNC’s Shaky Track Record. While AGNC’s sky-high dividend yield is certainly enticing, the company’s recent performance paints a less rosy picture:. AGNC’s dividend rate has remained flat sinc","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"AGNCO":"AGNC Investment Corp.","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","LU0640476718.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQ \"AU\" (USD) ACC","AGNCP":"AGNC Investment Corp","LU1280957306.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQUITIES \"AUP\" (USD) INC","BK4585":"ETF&股票定投概念","LU0234572021.USD":"高盛美国核心股票组合Acc","BK4534":"瑞士信贷持仓","BK4533":"AQR资本管理(全球第二大对冲基金)","LU0251142724.SGD":"Fidelity America A-SGD","LU1363072403.SGD":"Fidelity Global Financial Services A-ACC-SGD","MBS":"ANGEL OAK MORTGAGE-BACKED SECURITIES ETF","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","BK4550":"红杉资本持仓","LU0971096721.USD":"富达环球金融服务 A","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","LU0149725797.USD":"汇丰美国股市经济规模基金","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","LU1201861249.SGD":"Natixis Harris Associates US Equity PA SGD-H","BK4581":"高盛持仓","LU0742534661.SGD":"Fidelity America A-SGD (hedged)","AGNC":"美国资本代理公司","LU0980610538.SGD":"Natixis Harris Associates US Equity RA SGD-H","IE00B775SV38.USD":"NEUBERGER BERMAN US MULTICAP OPPORTUNITIES \"A\" (USD) ACC","BK4110":"抵押房地产投资信托","AGNCL":"AGNC INVESTMENT CORP DEP SHS REPSTG 1/1000TH PFD SER G","LU0234570918.USD":"高盛全球核心股票组合Acc Close","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","AGNCM":"AGNC Investment Corp","BRK.B":"伯克希尔B","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","BK4176":"多领域控股","LU0048573561.USD":"FIDELITY AMERICA \"A\" (USD) INC","AGNCN":"AGNC Investment Corp. - 1/1,000th  7.00%"},"translate_title":"沃伦·巴菲特说，“当下雨时，把桶拿出来”，这种高收益投资正在下雨","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"US3Y.BOND":1,"US5Y.BOND":1,"US6M.BOND":1,"US7Y.BOND":1,"US30Y.BOND":1,"AGNC":1,"US2Y.BOND":1,"US12M.BOND":1,"BRK.B":1,"US10Y.BOND":1,"MBS":1,"AGNCL":0.9,"AGNCP":0.9,"AGNCO":0.9,"AGNCN":0.9,"AGNCM":0.9,"US912797HH31.BOND":0.6,"US912796CX52.BOND":0.6,"US912797FH58.BOND":0.6,"US912797FS14.BOND":0.6,"US912797GB79.BOND":0.6,"US912797GK78.BOND":0.6,"US912797GL51.BOND":0.6,"US912797GW17.BOND":0.6,"US912797HE00.BOND":0.6,"US912797HG57.BOND":0.6},"content_text":"Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.\nIn his 2016 letter to Berkshire Hathaway shareholders, legendary investor Warren Buffett wrote, “Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons.” According to Buffett’s sage advice, now might be the perfect time to invest in high-yield assets while interest rates remain elevated.\nOne popular high-yield stock that has caught the eye of income-hungry investors is AGNC Investment Corp (NASDAQ:AGNC). With a jaw-dropping dividend yield of 15.38%, it’s easy to see why. However, a closer look at AGNC’s performance reveals some notable risks.\nThe Risks of Chasing Yield: AGNC’s Shaky Track Record\nWhile AGNC’s sky-high dividend yield is certainly enticing, the company’s recent performance paints a less rosy picture:\n\nYear-to-date, AGNC shares are down 4.3%\nOver the past year, the stock has fallen 5.18%\nThe 5-year performance is a dismal -48.55%\nAGNC’s dividend rate has remained flat since early 2020\n\nMore on Buffett: Warren Buffett once said, \"If you don't find a way to make money while you sleep, you will work until you die.\" These high-yield real estate notes that pay 7.5% – 9% make earning passive income easier than ever. \nAGNC primarily invests in agency mortgage-backed securities (MBS), which are backed by government-sponsored entities like Fannie Mae and Freddie Mac. While these securities are considered nearly risk-free due to their government backing, financing them through short-term leverage has become increasingly challenging in the current interest rate environment.\nAs rates have risen, AGNC has seen its debt servicing costs skyrocket while its interest income has stalled. The company has relied heavily on derivatives like interest rate swaps and shorting U.S. Treasuries to hedge against higher rates and prop up earnings. But as these hedges begin to expire, AGNC’s ability to maintain its lofty dividend and shareholder value is being called into question.\nA More Stable Alternative: Cityfunds Yield Fund\nFor investors seeking high yields backed by real estate assets without the excessive risks, the Cityfunds Yield fund offers a compelling alternative. While AGNC primarily invests in residential mortgages, Cityfunds focuses on home equity investments – a key distinction.\nHere’s what makes the Cityfunds Yield fund stand out:\n\nTargeting a stable 8% APY with quarterly distributions\nBacked by a diversified pool of collateralized real estate loans\nInvests in home equity agreement-backed notes and short-term mortgage notes\nOffers a manager-guaranteed base yield of 7% \nFive-year term fund with redemption available after a 12-month lock-up\n\nBy investing in a mix of home equity-backed notes and short-term mortgages, Cityfunds aims to generate steady interest income that can be distributed to investors on a quarterly basis. The fund’s 65% to 80% loan-to-value target on its home equity investments provides an added layer of security.\nUnlike AGNC, which has seen its book value per share plummet from nearly $18 to under $9 in just over four years, Cityfunds’ focus on home equity and conservative LTV ratios helps protect investor capital. And with a guaranteed base yield of 7%, investors can count on a reliable income stream even in challenging market conditions.\nSee how much you could earn with the Cityfunds Yield fund >>\nThe Bottom Line\nWhile AGNC’s 15%+ dividend yield might look like a golden opportunity at first glance, savvy investors know that all that glitters isn’t gold. The company’s shaky performance, overreliance on complex hedging strategies, and exposure to a shrinking agency MBS market should give potential buyers pause.\nFor those heeding Buffett’s call to “put out the bucket” and capture high yields while the economic storm rages on, the Cityfunds Yield fund offers a more stable, risk-adjusted way to invest in real estate-backed cash flows. With quarterly distributions, a guaranteed base yield, and a conservative approach to home equity investing, Cityfunds is making it rain for income investors.\nReady to learn more? Click here to explore the Cityfunds Yield fund and start putting Buffett’s timeless wisdom to work in your portfolio.\nRead Next:\n\nInvesting in real estate just got a whole lot simpler. This Jeff Bezos-backed startup will allow you to become a landlord in just 10 minutes, and you only need $100.\nMiami is expected to take New York's place as the U.S. Financial Capital. Here's how you can invest in the city with as little as $500 before that happens. \n\nThis article Warren Buffett Says 'When It Rains Gold, Put Out The Bucket' And This High Yield Investment Is Making It Rain originally appeared on Benzinga.com\n© 2024 Benzinga.com. Benzinga does not provide investment advice. 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