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Two Harbors Investment Corp.NYSE:TWO Stock Report

Market Cap US$1.3b
Share Price
US$12.51
US$11.28
11.0% overvalued intrinsic discount
1Y10.4%
7D0%
Portfolio Value
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Two Harbors Investment Corp.

NYSE:TWO Stock Report

Market Cap: US$1.3b

Two Harbors Investment (TWO) Stock Overview

Invests in, finances, and manages mortgage servicing rights (MSRs), agency residential mortgage-backed securities (RMBS), and other financial assets through RoundPoint in the United States. More details

TWO fundamental analysis
Snowflake Score
Valuation2/6
Future Growth3/6
Past Performance0/6
Financial Health3/6
Dividends3/6

Rewards

Earnings are forecast to grow 124.53% per year

Risk Analysis

Dividend of 10.87% is not well covered by earnings


TWO Community Fair Values

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See what 21 others think this stock is worth. Follow their fair value or set your own to get alerts.

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Two Harbors Investment Corp. Competitors

Price History & Performance

Summary of share price highs, lows and changes for Two Harbors Investment
Historical stock prices
Current Share PriceUS$12.51
52 Week HighUS$14.17
52 Week LowUS$8.78
Beta1.04
1 Month Change13.52%
3 Month Change12.10%
1 Year Change10.41%
3 Year Change3.99%
5 Year Change-56.07%
Change since IPO-84.04%

Recent News & Updates

Recent updates

Seeking Alpha • Oct 16

Why We View Two Harbors Investment Baby Bond As One Of The Safest In The Sector

Summary Two Harbors Investment baby bond offers an attractive yield of 8.88% with lower risk than common and preferred shares. TWO's strong capital buffer, high cash flow coverage, and 64% Agency MBS portfolio provide robust protection for TWOD investors. TWOD stands out in the mortgage REIT sector with one of the best equity-to-debt ratios and a stable dividend history. Compared to preferred stocks, TWOD delivers greater security and competitive yields, making it a compelling choice for income-focused investors. Read the full article on Seeking Alpha
Seeking Alpha • Oct 29

Two Harbors: Weak Earnings

Summary Two Harbors Investment Corp. is highly sensitive to interest rate changes, with Q3 earnings weak and dividend coverage increasingly opaque. The company's focus on mortgage servicing rights (MSRs) aims to reduce exposure to rate changes, but earnings indicate underlying issues. Q3 comprehensive income was $19.3 million, with a net loss of $250.2 million, with very little earnings available for distribution, raising concerns about dividend sustainability. Preferred shares are recommended over common stock due to better stability and less risk of dividend cuts. Read the full article on Seeking Alpha
Seeking Alpha • Jul 22

Two Harbors Preferreds Look Much Better Than The Common

Summary Two Harbors preferreds have significantly outperformed the common shares over the past five years. Structural aspects of mREITs like the requirement to pay out 90% of taxable income and the lack of real estate depreciation, favor preferreds over common shares. The conversion to a floating rate for Two Harbors preferreds offers the potential for significant capital appreciation. Read the full article on Seeking Alpha
Seeking Alpha • Jan 07

Two Harbors: A Mortgage REIT Recovery Play With A 13% Yield

Summary Two Harbors stock is a potentially attractive investment opportunity in the mortgage REIT sector. The Federal Reserve's decision to lower the federal fund rate in FY 2024 could benefit mortgage REITs by reducing interest expenses and reducing pressure on MBS values. As a result, Two Harbors may see improved portfolio performance and return to book value growth. Shares are trading at a 12% discount to book value and are cheaper than those of Annaly and AGNC. Read the full article on Seeking Alpha
Seeking Alpha • Sep 11

Two Harbors Investment: Mark-To-Market Books Can Be Deceiving

Summary Two Harbors Investment Corp. has experienced a decline in book value per share due to rising interest rates and mark-to-market adjustments. The future performance of Two Harbors will be heavily influenced by the trajectory of interest rates, but there are signs of inflation cooling which could reduce interest rate volatility. The new dividend level appears to be more sustainable and better covered by earnings. Read the full article on Seeking Alpha
Seeking Alpha • Jun 26

Two Harbors: One Yield Gets Fatter, The Other Is Cut

Summary Two Harbors' 25% dividend cut and declining book value render its common shares a risky investment. The preferred shares offer better value with a 10% yield on cost for 81 cents on the dollar. A possible normalization of macroeconomic conditions could lead to a recovery of the commons. Read the full article on Seeking Alpha
Seeking Alpha • Feb 23

Two Harbors: Two Yields

Summary Two Harbors recently cut its quarterly cash dividend payout by 12% with its yield now at 14.2%. A further near-term cut to the payouts is likely with the mREIT's earnings and book value to face headwinds this year. The preferreds come with a 9.2% yield on cost and a 52% yield to call. Two Harbors (TWO) faces a sustained erosion of its book value and a quarterly dividend payout now under siege from rising Fed funds rates. The mortgage REIT last declared a quarterly dividend payout of $0.60 per share, a 12% decline from its prior payout, for a 14.2% yield. Data by YCharts The St Louis Park, Minnesota-based externally managed mREIT has had a tough few years with the direction of total returns first reflecting the pandemic and only partially recovering to then run into headwinds from the current rising Fed funds rate environment. Critically, it's the book value that matters and this last came in at $17.72 per share during the company's recently reported earnings for its fiscal 2022 fourth quarter. Whilst the commons trading at a 4.7% discount to book value might imply a certain margin of safety, this has been falling for a while now. The First Yield The mREIT had to engineer a 1 for 4 reverse stock split in November last year to hedge the prospect of delisting against a stock price approaching the NYSE minimum listing requirement. Book value per share of $5.87 in the year-ago quarter can be adjusted up to $23.48 to place the most recent figure at a 24.5% decline from its year-ago figure. The mREIT invests in agency residential mortgage-backed securities and mortgage servicing rights. This helped Two Harbors build a portfolio that was fully valued at $14.7 billion as at the end of its fourth quarter. Earnings available for distribution was $22.2 million, or $0.26 per share, down materially from EAD of $73.3 million in the year-ago quarter. This was driven by an average portfolio yield of 4.92%, up from 4.61% in the prior third quarter. However, the mREIT's average cost of financing was 3.95%, up sequentially by 111 basis points from 2.84% in the prior third quarter. This meant a net spread of 0.97%, down from 1.77%. The stabilization of the mREIT's book value forms the most near-term need for the bulls. On a quarter-on-quarter basis book value per share grew by 11.6% from $16.42 to reflect what was the mortgage spread tightening as well as the mREIT's purchase of 2.9 million shares of preferred stock. An action that contributed $0.26 to the book value during the quarter. The current rising rate environment is fundamentally an antithesis of the mREIT model which highly depends on leverage to drive returns. The current year poses uncertainty with inflation still elevated and the Fed signaling they are willing to go further than initial market expectations for only three 25 basis point hikes. Hence, we will likely see more volatility with book value this year even as the quarter-on-quarter results were positive and with the mREIT recently issuing 10 million new shares as a form of less expensive financing to expand its RMBS and MSR portfolio. Coverage of the dividends is currently impaired from an EAD perspective but the company fully covered it with a new metric introduced called income, excluding market-driven value changes. This was $0.73 per share during the fourth quarter. The Second Yield Two Harbors' 8.125% Series A Fixed-to-Floating Rate Cumulative Preferred Stock (TWO.PA) pays out a $2.03 coupon for a 9.2% yield on cost. Whilst this is around 500 basis points lower than the commons, it comes with close to zero risk of income deterioration. They're essentially a form of fixed income wrapped within an equity-like security with no voting rights but with a higher rank than the commons on the capital structure. This means they have a greater claim to earnings. QuantumOnline To be clear here, any disruption to the mREIT's earnings has and will continue to be shouldered by the common shareholders with the preferreds trading with a cumulative clause. This means any unpaid distributions accrue as liabilities on the Two Harbors' balance sheet. With the Series A currently trading at $22.10, an 11.6% discount to their par value, their yield to call stands at 52% with total income payments of around $8.6275 until 2027 and a $2.9 uplift from a return to par.
Seeking Alpha • Feb 17

Two Harbors: The Book Value Is Still The Issue

Summary External economic factors are making Two Harbors Investment Corp.’s position quite challenging in 2023, and the book value per share is likely to decline further. Futures markets initially predicted that the U.S. Federal Reserve would cut interest rates twice before the end of 2023, but there might be no rate cuts at all in 2023. The company reported surprisingly good Q4 earnings, but the reverse stock split and declining book value trend suggest caution for investors. Investment thesis Two Harbors Investment Corp. (TWO) reported positive fourth-quarter results compared to their not-very-great third-quarter figures. Despite this positive news, the book value per share has been declining for years, and their portfolio is under pressure due to external market forces such as the RMBS market issuances and still-rising interest rates. In addition, the latest inflation report suggests that the Fed might not cut interest rates at the end of 2023 but rather keep them at elevated levels, which will prolong the difficulties TWO is facing. The stock is fairly valued, but if the book value keeps dropping, the current price could easily become overvalued within a year. RMBS market for 2023 The last quarter of 2022 and the beginning of 2023 were quite turbulent in the mortgage markets. Last October, mortgage rates reached a more than 10-year high of 7% due to the Federal Reserve making rapid rate increases in 2022. The housing sector was hit the hardest by this, with mortgage rates almost double what they were a year prior. Since the peak mortgage rates have slightly declined. Mortgage rates have been slowly but steadily decreasing since last November (but we have seen a small uptick in February) and enjoying a bit of a positive impact on the housing market. The average rate for a fixed-rate mortgage increased in February following the 10-year Treasury, which rose from 3.39% at the beginning of the month to 3.86% this week. Freddie Mac reported that the 30-year fixed-rate mortgage increased to an average of 6.32% yesterday, compared to 6.09% from the beginning of February. freddiemac.com In the fourth quarter of 2022, an average of $13.3 billion RMBS per month was issued in the U.S. I assume the first quarter of 2023 will be similar, we already see January's figure of the issuance of $11.9 billion RMBS. However, these issuances are down by 60-65% Y-o-Y. Both CMBS and RMBS issues are down by significant numbers, and the vast majority of TWO's portfolio consists of residential mortgage-backed securities. sifma.org Home prices have grown by approximately 20% since the start of the pandemic, and despite recessionary fears, prices have not dropped significantly (yet). So, it remains difficult for many potential buyers to purchase a home. This is further complicated by current owners who are reluctant to sell due to the ultra-low mortgage rates they got in recent years. I expect this trend to continue in the upcoming months, possibly until late 2023. The number of completed transactions of single-family homes, townhomes, condominiums, and co-ops fell by 38% by the end of 2022 compared to the beginning of 2022, and the current figure is approximately 25% lower than that pre-pandemic average home sales number. In addition, in the past few months, investors had been expecting the Federal Reserve to reduce interest rates at the end of 2023. However, recent higher-than-expected U.S. inflation rate figures have caused analysts and investors to rethink their earlier predictions. Futures markets initially predicted that the U.S. Federal Reserve would cut interest rates twice before the end of 2023, but since the January inflation report came this week, futures markets suggest there might not be any rate cuts at all at the Fed's later-year meetings in 2023. This will prolong the pressure on TWO's portfolio for this year. Q4 results Two Harbors Investment Corp. reported fair fourth-quarter earnings after the Q3 disaster. The book value at the end of Q3 was $16.42 per share, representing a -16.2% total economic quarterly return. In Q4 the economic return was +11.6%. The portfolio performance reflected one of the most challenging market environments in decades in the third quarter, and the fourth quarter positivity is rather just a temporary good performance. While the interest income has seen a surge of 5.2% compared to Q3 due to the rise of cash rates, the decrease in RMBS portfolio size has somewhat leveled it out. MSR borrowing expenses rose significantly (by 38%) due to higher financing rates and larger average balances, while RMBS expenses dropped because of a lesser average balance. The book value has been declining steadily for years, in the last quarter of 2020 the book value per share was $30.52 (adjusted for the reverse stock split) and by the end of 2022, this figure was down to $17.72, even with a 7.9% increase compared to Q3 2022. Fourth Quarter Presentation 2022
Seeking Alpha • Feb 02

Two Harbors Investment announces 10M share offering

Two Harbors Investment (NYSE:TWO) on Thursday announced an underwritten public offering of 10M shares. The REIT expects to grant underwriters a 30-day option to buy up to an additional 1.5M shares. Net proceeds will be used to acquire target assets, including residential mortgage-backed securities, mortgage servicing rights and other financial assets, as well as for general corporate purposes. Earlier, Two Harbors (TWO) issued preliminary Q4 results.

Shareholder Returns

TWOUS Mortgage REITsUS Market
7D0%-3.9%-1.0%
1Y10.4%-3.8%23.3%

Return vs Industry: TWO exceeded the US Mortgage REITs industry which returned -3.8% over the past year.

Return vs Market: TWO underperformed the US Market which returned 23.3% over the past year.

Price Volatility

Is TWO's price volatile compared to industry and market?
TWO volatility
TWO Average Weekly Movement7.1%
Mortgage REITs Industry Average Movement3.8%
Market Average Movement7.2%
10% most volatile stocks in US Market16.2%
10% least volatile stocks in US Market3.2%

Stable Share Price: TWO has not had significant price volatility in the past 3 months compared to the US market.

Volatility Over Time: TWO's weekly volatility (7%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
2009486Bill Greenbergwww.twoinv.com

Two Harbors Investment Corp. invests in, finances, and manages mortgage servicing rights (MSRs), agency residential mortgage-backed securities (RMBS), and other financial assets through RoundPoint in the United States. The company target assets include agency RMBS collateralized by fixed rate mortgage loans, adjustable rate mortgage loans, hybrid mortgage loans, or derivatives; and other assets, such as financial and mortgage-related assets, comprising non-agency securities and non-hedging transactions. It qualifies as a REIT for federal income tax purposes.

Two Harbors Investment Corp. Fundamentals Summary

How do Two Harbors Investment's earnings and revenue compare to its market cap?
TWO fundamental statistics
Market capUS$1.31b
Earnings (TTM)-US$396.71m
Revenue (TTM)US$493.78m
2.7x
P/S Ratio
-3.3x
P/E Ratio

Is TWO overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report (TTM)
TWO income statement (TTM)
RevenueUS$493.78m
Cost of RevenueUS$11.38m
Gross ProfitUS$482.40m
Other ExpensesUS$879.11m
Earnings-US$396.71m

Last Reported Earnings

Mar 31, 2026

Next Earnings Date

n/a

Earnings per share (EPS)-3.78
Gross Margin97.70%
Net Profit Margin-80.34%
Debt/Equity Ratio479.2%

How did TWO perform over the long term?

See historical performance and comparison

Dividends

10.9%
Current Dividend Yield
-37%
Payout Ratio

Company Analysis and Financial Data Status

DataLast Updated (UTC time)
Company Analysis2026/05/20 21:33
End of Day Share Price 2026/05/20 00:00
Earnings2026/03/31
Annual Earnings2025/12/31

Data Sources

The data used in our company analysis is from S&P Global Market Intelligence LLC. The following data is used in our analysis model to generate this report. Data is normalised which can introduce a delay from the source being available.

PackageDataTimeframeExample US Source *
Company Financials10 years
  • Income statement
  • Cash flow statement
  • Balance sheet
Analyst Consensus Estimates+3 years
  • Forecast financials
  • Analyst price targets
Market Prices30 years
  • Stock prices
  • Dividends, Splits and Actions
Ownership10 years
  • Top shareholders
  • Insider trading
Management10 years
  • Leadership team
  • Board of directors
Key Developments10 years
  • Company announcements

* Example for US securities, for non-US equivalent regulatory forms and sources are used.

Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more.

Analysis Model and Snowflake

Details of the analysis model used to generate this report is available on our Github page, we also have guides on how to use our reports and tutorials on Youtube.

Learn about the world class team who designed and built the Simply Wall St analysis model.

Industry and Sector Metrics

Our industry and section metrics are calculated every 6 hours by Simply Wall St, details of our process are available on Github.

Analyst Sources

Two Harbors Investment Corp. is covered by 24 analysts. 5 of those analysts submitted the estimates of revenue or earnings used as inputs to our report. Analysts submissions are updated throughout the day.

AnalystInstitution
Bruce HartingBarclays
Kenneth BruceBofA Global Research
Jessica Levi-RibnerB. Riley Securities, Inc.