Top Stock to Buy #1 – American Capital Agency Corp. (AGNC)
American Capital Agency Corp. (NASDAQ:AGNC) is a real estate investment trust (REIT) that earns income primarily from investing on a leveraged basis in agency mortgage-backed securities.
The stock was hit with a recent round of profit-taking and a rumor that the REIT would be cutting its annual dividend, which now stands at $5 per share for a yield of 15.6%. But the company has strong cash flow, and if it sells some of its holdings under QE3, then it should book profits from the sales.
Credit Suisse analyst Douglas Harter increased his price target to $36 from $32, noting that a “premium is justified by management’s ability to consistently protect (and grow) book value while generating strong taxable earnings.”
Technically, AGNC has retreated from a high of over $36 and appears to be stabilizing at its 200-day moving average at $32 and a support line at $31.50. Buy AGNC for a rebound to $36 and its high dividend payout. On Oct. 29, the company reported Q3 comprehensive income of $3.98 per share and a $500 million share buyback program.