3 Double-Digit-Yield Stocks to Buy That Earned Their Dividends Last Quarter

AGNC Investment’s 16.7% forward yield and Annaly Capital Management’s 16.5% yield are currently covered by their respective income measures, but rising rates could pressure book values, share prices and future payouts. AGNC reported a comprehensive loss of $1.28 per share, while Annaly generated $0.80 per share in EAD against a $0.75 quarterly dividend; management expects to out-earn in Q4. Rithm Capital’s 10.7% yield appears better covered, with $0.55 per share in earnings available for distribution versus a $0.25 quarterly dividend, and the article argues its diversification may support greater dividend security.

Analysis

The key exposure is not simply whether policy rates rise or fall: agency mortgage REITs can lose book value when mortgage spreads widen, rate volatility increases, or hedges fail to offset MBS price moves—even if portfolio income still covers the dividend. That makes current payout coverage a weak signal of durable total returns. Annaly’s EAD and AGNC Investment’s net spread are also different measures, so their apparent coverage should not be treated as directly comparable.

Rithm’s broader fee, servicing, and lending activities may dampen reliance on agency-MBS carry, but diversification is not a hedge against a housing or credit downturn: servicing values, originations, and construction lending have their own rate and credit sensitivities. Its reported distribution coverage is encouraging, not proof that the payout is insulated.

Over days, rate expectations and MBS spreads can dominate share prices. Over 1–3 months, monitor book-value updates, earnings coverage, and management guidance; over 6–18 months, persistent spread widening or weaker housing credit could expose the limits of Rithm’s diversification. The contrarian point: a high yield can remain covered while book value erodes, so headline yield may understate the risk of poor total returns. Verify current discounts to book, hedge positioning, and segment-level earnings before sizing a relative trade.

Key Decisions for Investors

• Favor Rithm over Annaly for income-oriented exposure on the evidence presented, but treat this as a relative preference rather than a low-risk dividend proxy. Before entry, compare current price-to-book and segment earnings; those data are missing here.
• Consider a modest long-Rithm/short-Annaly relative-value position only if valuation does not already price in Rithm’s stronger payout coverage. The thesis is relative dividend resilience, not a hedge against sector-wide mortgage-spread widening; reduce or exit if Rithm’s distribution coverage materially weakens or credit losses rise.
• Avoid buying AGNC Investment or Annaly solely for their headline yields. Reassess if book value stabilizes and coverage persists across several quarters; a renewed decline in book value or a dividend reduction would falsify the stabilization case.
• Track agency MBS spreads and volatility, financing costs, and each company’s next book-value and earnings disclosures. A sustained widening in spreads or worsening hedge effectiveness would be a near-term warning; stable rates alone would not establish that the dividend or total return is secure.