14% Dividend Yield, Heavy Insider Buying Make This mREIT A Strong Buy
Two Harbors Investment (TWO) was one of the mortgage REITs that we considered in our mREITs portfolio.
- (1888PressRelease) August 29, 2012 - Two Harbors Investment (TWO) was one of the mortgage REITs that we considered in our mREITs portfolio. Among the mREITs in the portfolio, Two Harbors continues to be the only REIT that positioned its assets portfolio in a way that enabled the company to earn the highest interest rate spread of 3.6%. Amid the non-existent interest rate environment, it offers an attractive dividend yield of 14%.
Recent Quarter's Performance Review
The company earned a net interest spread of 3.6% during the second quarter of the current year, 30bps below what it earned during the first quarter. This was the lowest in the past four quarters. In comparison, both Annaly Capital (NLY) and American Capital (AGNC) posted a net interest spread of 1.54% and 1.65%, respectively. This is largely due to the fact that Two Harbors invests in high yielding non-agency securities, while Annaly Capital and American Capital exclusively invest in agency securities only. Like Annaly Capital and American Capital, the spread for Two Harbors declined largely due to the flattening of the yield curve.
Net interest income for the company during the second quarter surged to $90.4 million, up from $36.9 million during the prior year. Net interest income surged primarily due to a 161% surge in interest income coming from available-for-sale securities. Interest expense for the quarter surged to $15.5 million from $3.8 million in the first quarter.
Source URL: http://seekingalpha.com/article/831471-14-dividend-yield-heavy-insider-buying-make-this-mreit-a-strong-buy
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