Two Harbors Plunges 10.9% in a Month: Should You Buy the Dip?

Zacks11-20 01:06

Two Harbors Investment Corp. TWO shares lost 10.9% in a month compared with the industry’s decline of 2.8%. The stock also underperformed its peers AGNC Investment AGNC and Annaly Capital Management ...

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The stock also underperformed its peers AGNC Investment AGNC and Annaly Capital Management ...</p>\n\n<a href=\"https://finance.yahoo.com/news/two-harbors-plunges-10-9-170600890.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Two Harbors Plunges 10.9% in a Month: Should You Buy the Dip?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTwo Harbors Plunges 10.9% in a Month: Should You Buy the Dip?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-20 01:06 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/two-harbors-plunges-10-9-170600890.html><strong>Zacks</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Two Harbors Investment Corp. TWO shares lost 10.9% in a month compared with the industry’s decline of 2.8%. The stock also underperformed its peers AGNC Investment AGNC and Annaly Capital Management ...</p>\n\n<a href=\"https://finance.yahoo.com/news/two-harbors-plunges-10-9-170600890.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"NLY","symbol_name":"Annaly Capital Management","start_time":0,"source_url":"https://finance.yahoo.com/news/two-harbors-plunges-10-9-170600890.html","article_id":"2484974247","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/FB_woUNJvEdJqKON5QFf5w--~B/aD00MDA7dz02MzU7YXBwaWQ9eXRhY2h5b24-/https://media.zenfs.com/en/zacks.com/7ad85367f4dd5ec53dc613f9ce95cb57"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2484974247","pubTimestamp":1732035960,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Two Harbors Investment Corp. TWO shares lost 10.9% in a month compared with the industry’s decline of 2.8%. The stock also underperformed its peers AGNC Investment AGNC and Annaly Capital Management NLY.Image Source: Zacks Investment ResearchTWO is a Real Estate Investment Trust  that focuses on investing in, financing, and managing residential mortgage-backed securities  and mortgage loans. The company offers favorable long-term stockholder returns with a huge dividend yield, which may compel many investors to buy the stock.To answer this, it is essential to delve into the details and evaluate various factors at play.TWO’s financials have been adversely impacted by high interest rates. Higher rates led to a surge in TWO’s borrowing costs, which resulted in a net interest loss in the nine months ended Sept. 30, 2024. The negative return and falling profitability raised concerns about the company’s capacity to sustain its high-yielding payment.The company is not the only dividend-paying","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"NLY":"Annaly Capital Management","RMBS":"Rambus","BK4588":"碎股","BK4110":"抵押房地产投资信托","BK4141":"半导体产品","REIT":"ALPS Active REIT ETF","AGNC":"美国资本代理公司","TWO":"TWO HARBORS INVESTMENT CORP","BK4585":"ETF&股票定投概念"},"translate_title":"两港一个月内暴跌10.9%：你应该逢低买入吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"NLY":1,"REIT":1,"RMBS":1,"AGNC":1,"TWO":0.9,"US7Y.BOND":0.9,"US6M.BOND":0.9,"US5Y.BOND":0.9,"US3Y.BOND":0.9,"US30Y.BOND":0.9,"US2Y.BOND":0.9,"US12M.BOND":0.9,"US10Y.BOND":0.9},"content_text":"Two Harbors Investment Corp. TWO shares lost 10.9% in a month compared with the industry’s decline of 2.8%. The stock also underperformed its peers AGNC Investment AGNC and Annaly Capital Management NLY.\nPrice Performance\nImage Source: Zacks Investment ResearchTWO is a Real Estate Investment Trust (REIT) that focuses on investing in, financing, and managing residential mortgage-backed securities (RMBS) and mortgage loans. The company offers favorable long-term stockholder returns with a huge dividend yield, which may compel many investors to buy the stock.\nGiven the recent dip in its share price and a lucrative dividend yield, is TWO stock worth investing in now? To answer this, it is essential to delve into the details and evaluate various factors at play.\nTwo Harbors to Benefit From Rate Cuts\nTWO’s financials have been adversely impacted by high interest rates. Higher rates led to a surge in TWO’s borrowing costs, which resulted in a net interest loss in the nine months ended Sept. 30, 2024. The negative return and falling profitability raised concerns about the company’s capacity to sustain its high-yielding payment.\nDue to spread risk, high rates also affected the book value of TWO's investments. In the first nine months of 2024, the company’s book value per share declined to $14.93 from $15.06 during the same months of 2023.\nThis month, the Federal Reserve announced this year’s second interest rate cut after lowering the rates by 50 basis points (bps) in September. This time, interest rates were cut by 25 bps, bringing down the federal funds rate to 4.5-4.75%.\nAs the central bank lowered the rates, long-term bond yields declined, resulting in a decline in mortgage rates. Per a Freddie Mac report, the average rate on a 30-year fixed-rate mortgage dropped to 6.78% as of Nov. 14, 2024, from 6.79% a week ago and 7.44% a year ago.\nHousing affordability challenges are expected to decline with lower mortgage rates. Demand is set to increase in the coming days, with rates trending relatively lower and balanced supply/affordability playing out in the mortgage market. With this turnaround, mortgage originations will likely witness a positive trend. This will reduce operational and financial challenges for mREITs like Two Harbors and increase the gain on sale margin and investment activities.\nMore interest rate cuts are likely in 2025, which should help boost TWO’s net interest spread and the book value of its portfolio. This will provide the company with a much-needed boost.\nTWO’s Attractive Dividend Yield\nThe publicly traded mREIT offers a lucrative dividend yield.\nIncome-seeking investors have a large appetite for REIT stocks, as U.S. law requires REITs to distribute 90% of their annual taxable income as dividends.\nTWO’s current dividend yield is 15.50%. This is impressive compared with the industry’s average of 10.13% and attracts investors as it represents a steady income stream.\nThe company is not the only dividend-paying stock among Zacks Industry – REIT and Equity Trust. Stocks like NLY and AGNC also provide investors with solid dividend options.\nNLY has an annual dividend yield of 12.9% and AGNC has a dividend yield of 14.4%.\nTWO’s Portfolio to Generate Long-Term Return\nTwo Harbors has established an investment portfolio primarily composed of RMBS with mortgage servicing rights (MSR) at its core. This portfolio has less exposure to changes in mortgage spreads than portfolios without MSR while maintaining the benefits of spread tightening and declining volatility. As of Sept. 30, 2024, the company’s total portfolio had 74.7% exposure to Agency RMBS.\nHigh-quality investment returns are the company's primary emphasis, and its combined approach aims to maximize value extraction from MSR assets for the benefit of shareholders. The company is also enhancing its investment portfolio with more revenue and hedging options.\nIs Two Harbors Stock Worth Betting On?\nWith the falling interest rate, Two Harbors’ earnings pressure should be alleviated as funding costs come down, allowing the company to increase its dividend payout. That could be a strong tailwind for the company in the upcoming period.\nEarnings Estimate\nImage Source: Zacks Investment Research\nFind the latest earnings estimates and surprises on Zacks Earnings Calendar. \nFrom a valuation point of view, the TWO stock appears inexpensive relative to the industry. The company is currently trading at the 12-month trailing price-to-book (P/B) ratio of 0.77, below the industry’s 0.86. The stock is also trading below NLY’s P/B ratio of 1.01 and AGNC’s 0.94.\nPrice-to-Book\nImage Source: Zacks Investment Research\nHowever, volatility in the mortgage market, unfavorable changes in the yield curve and deterioration of the generic financial conditions might affect TWO’s performance. The company also has a track of lowering dividends during stressful times. Its payout has declined 13.33% in the past five years.\nAlso, the stock is currently trading below its 50-day moving average, indicating bearish sentiments among investors.\n50-Day Moving Average\nImage Source: Zacks Investment Research\nHence, investors should refrain from rushing to buy Two Harbors stock right now. Instead of banking on its lucrative dividend yield, they should analyze the interest rate changes and the mortgage market before adding the stock to their portfolios.  \nTWO currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.\nWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report\nAGNC Investment Corp. (AGNC) : Free Stock Analysis Report\nTwo Harbors Investments Corp (TWO) : Free Stock Analysis Report\nAnnaly Capital Management Inc (NLY) : Free Stock Analysis Report\nTo read this article on Zacks.com click here.\nZacks Investment Research","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2484974247"}