High-profit Stock Purchase Opportunity: Invest $1,000 Immediately in This Top-Notch Pick
Looking for high-yield investments with a thousand buck? You might be tempted by AGNC Investment, boasting a whopping 16%+ dividend yield. But, scoop up Toronto-Dominion Bank (TD) instead, even with a lower yield. Here's why.
What's AGNC Investment all about?
AGNC Investment is a specialized mortgage real estate investment trust (REIT). Instead of purchasing physical properties, AGNC invests in mortgage bonds. They aim to profit from the difference between the interest earned on these securities and their operating expenses. However, the high yield isn't as tempting as it seems, given their strategy of using leverage to enhance returns and the declining dividend for years after their Initial Public Offering (IPO).
The chart below illuminates AGNC Investment's dividend's downward trend over the years, mirroring the declining share price. While investors have profited due to larger dividends paid out compared to the share price loss, they've missed out on stable or growing dividends, as well as a steady increase in share prices that many income-focused investors seek.
AGNC data by YCharts.
TD Bank: A more reliable dividend stock
TD Bank, or simply TD, stands out as a much more dependable dividend stock. Despite a lower 4.5% yield, it's been relatively stable, even during economic downturns. For example, during the Great Recession, TD Bank maintained its dividend unlike many of its U.S. peers. Moreover, it recently raised the dividend at the beginning of 2025, despite facing certain challenges.
TD data by YCharts.**
Its lower dividend yield, however, outperforms several benchmarks. Compared to the 1.3% yield of the S&P 500 index, TD's yield is significantly higher. It also outpaces the finance industry's average yield of 2.7%, and it is historically high for TD Bank, having last been this high during the Great Recession and the pandemic's peak. Essentially, TD Bank is offering an attractive yield.
The high dividend is a by-product of TD Bank's U.S. division being in hot water for having weak internal controls against money laundering. U.S. regulators are displeased and have restricted the company's growth in the U.S. market until the internal control weakness is addressed. TD Bank's Canadian business still performs strongly, but the U.S. division was expected to drive growth. It may take several years to resolve this issue, causing hesitation among investors.
Despite this predicament, only TD Bank remains a sturdy financial institution with little risk of a dividend cut. In fact, the bank reported second-quarter 2025 earnings beating Wall Street expectations, demonstrating its resilience amid adversity. At its core, TD Bank is a relatively low-risk, high-yield turnaround play.
Bottom Line: Don't reach for yield – buy TD Bank
If you reckon AGNC Investment will provide a steady income stream with its high yield, well, history indicates you could encounter some rough waters. If you adjust your income expectations and invest in TD Bank, you're more likely setting yourself up for years of dependable dividends and share price recovery as it navigates its company-specific challenges.
- Despite AGNC Investment offering a high yield, the decrease in dividend over the years and its reliance on leveraging strategies make it less reliable compared to TD Bank.
- While TD Bank's dividend yield of 4.5% is lower than AGNC Investment's, it outperforms benchmarks such as the S&P 500 index and the finance industry's average yield, making it an attractive investment option.
- Despite facing internal control issues in its U.S. division, TD Bank remains a stable financial institution with little risk of a dividend cut, making it a more dependable choice for investors seeking high-yield investments in the personal-finance segment.
