# High-Yield Traps: The Risk Game Behind 14% vs 11%

Looking at the dividend yield, AGNC (a mortgage REIT) throws out an enticing figure of 14%, beating the S&P 500's 1.2%. But here's the catch: this fund has cut its dividend multiple times over the past 10 years, from $0.22 per share in 2014 down to $0.12 per share now, with the last cut in 2020.

Why is the cut so severe? AGNC's strategy is very simple - it only invests in Agency MBS (government-backed mortgage asset packages), relying on leverage to amplify returns. Once the yield falls below the financing cost, the dividends will take a hit. High yield = high risk, this calculation is clear.

In contrast, Starwood Property Trust (11% yield) is much more stable. The investment portfolio is diversified into commercial real estate loans (53%), residential loans (9%), infrastructure (10%), and direct holdings (19%). This year, it also spent $2.2 billion to acquire Fundamental Income Properties, holding 17-year lease agreements. The result? **Dividends have never been reduced in over a decade.**

In terms of risk-reward ratio, Starwood can flexibly adjust its strategy, while AGNC is locked into the MBS path. For investors seeking stable cash flow, an 11% steady return is better than a 14% variable.