AGNC Investment and Ares Capital offer high dividend yields, attracting income-focused investors. AGNC focuses on mortgage-backed securities, while Ares Capital lends to middle-market companies. Both are sensitive to interest rate changes but differ in risk exposure. Consider these factors before investing in high-yield stocks.

AGNC Investment is a REIT that invests in mortgage-backed securities, using leverage to pay double-digit dividends. It primarily invests in agency MBSs backed by government-sponsored entities. AGNC uses short-term borrowing to invest in long-term MBS, leading to earnings fluctuation based on the yield curve.

Ares Capital is a BDC that lends to middle-market companies, prioritizing first- and second-lien loans for bankruptcy protection. Its portfolio is diversified across various industries, providing a weighted-average yield of about 10%. Ares Capital benefits from rising interest rates due to its floating-rate loan focus.

AGNC Investment and Ares Capital offer attractive dividend yields but perform differently based on interest rate environments. AGNC benefits from a steeper yield curve, while Ares Capital thrives in a “higher-for-longer” rate environment. Consider your investment goals and risk tolerance when choosing between the two companies.

Read more at Yahoo Finance: AGNC Investment vs. Ares Capital