## 14% High Yield Trap? Why REIT Investors Should Change Their Mindset

The comparison of two high-yield REITs has become popular: AGNC dividend yield is 14%, while Starwood is only 11%, but the latter seems to be more stable?

**The High Yield Cost of AGNC**
AGNC is playing a leverage game—borrowing money to invest in government-backed mortgage bonds. High leverage = high returns, but also high risk. A ROE of 17% looks good, but once the market turns, there’s no buffer. The most straightforward evidence: the monthly dividend set at $0.22 per share in 2014 has now been cut to $0.12, having been reduced multiple times over the past decade. High interest does not equal stable dividends.

**Why Starwood is Safer**
Looking at Starwood's investment layout from another angle: commercial real estate loans 53%, residential loans 9%, infrastructure 10%, direct property holdings 19%. This is called diversification. The key is - dividends have never been reduced in over a decade, and they are still expanding. This year they acquired Fundamental Income for 2.2B and invested 800 million in infrastructure, showing flexibility and agility.

**How to choose**
Those who like to gamble should consider AGNC's 14%, but be mentally prepared for potential rate cuts. For those who want to sleep soundly, Starwood's 11%, although lower, has a record of stable dividends for over a decade. Different risk preferences lead to different choices.