Assessing the sustainability of TWO’s dividend profile
Two Harbors Investment Corp (NYSE:TWO) recently announced a dividend of $0.45 per share, payable on April 29, 2024, with an ex-dividend date of April 3, 2024. The company’s dividend history, yield, and growth rate are also in focus as investors look forward to future payouts. Let’s examine Two Harbors Investment Corp’s dividend history and assess its sustainability using data from GuruFocus.
What does Two Harbors Investment Corp do?
Two Harbors Investment Corp is a real estate investment trust primarily focused on investing in, financing and managing residential mortgage-backed securities (RMBS). Housing loan. Mortgage repayment right. and commercial real estate. The majority of the firm’s investment portfolio is split between agency RMBS and non-agency RMBS purchased from government-backed companies. Two Harbors derives nearly all of its revenue in the form of interest income collected from investments. Most of this income is derived from other securities, with a significant amount also from mortgage loans held for investment in securitization trusts.
A glimpse at Two Harbors Investment Corp’s dividend history
Two Harbors Investment Corp has maintained a consistent dividend payment record since 2009. Dividends are currently distributed on a quarterly basis. Below is a graph showing annual dividends per share to track historical trends.
Analyzing Two Harbors Investment Corp’s dividend yield and growth rate
As of today, Two Harbors Investment Corp’s trailing 12-month dividend yield is 14.79% and its trailing 12-month dividend yield is 13.61%. This suggests that we can expect dividend payments to decline over the next 12 months.
Over the past 3 years, Two Harbors Investment Corp’s annual dividend growth rate was -9.10%. Expanding to a 5-year period, this rate decreased to -26.00% per year. Also, Two Harbors Investment Corp’s annual dividend per share growth rate over the past 10 years is -16.60%.
Based on Two Harbors Investment Corp.’s dividend yield and five-year growth rate, as of today, Two Harbors Investment Corp. stock has a five-year cost yield of approximately 3.28%.
Questions about sustainability: Dividend payout ratio and profitability
To assess dividend sustainability, you need to evaluate a company’s payout ratio. Dividend payout ratio helps determine the proportion of a company’s profits that it distributes as dividends. A low ratio indicates that the company is retaining a significant portion of its earnings, thereby ensuring that it has funds for future growth or unexpected economic downturns. As of 2023-12-31, Two Harbors Investment Corp’s dividend payout ratio is 0.00.
Two Harbors Investment Corp’s Profitability Rank helps you understand the company’s earning power compared to its peers. GuruFocus rates Two Harbors Investment Corp.’s profitability at 3 out of 10 as of December 31, 2023, suggesting the dividend may not be sustainable. The company has posted a net profit in seven of the past 10 years.
Growth indicators: future outlook
To ensure dividend sustainability, companies must have solid growth metrics. Two Harbors Investment Corp’s growth rank of 3 out of 10 suggests that the company’s growth prospects are poor and its dividend may be unsustainable.
The company’s three-year EPS growth rate indicates its ability to grow earnings, which is a key factor in maintaining a dividend over the long term. Over the past three years, Two Harbors Investment Corp’s revenue has grown by an average of about 65.70% per year. This is higher than about 89.06% of its global competitors.
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In conclusion, Two Harbors Investment Corp.’s high dividend yield may attract income-oriented investors, but its negative dividend growth rate and low profitability and growth rank pose a challenge to the long-term sustainability of its dividend payments. There are concerns about this. The company’s solid three-year EPS growth provides a glimmer of hope, suggesting the potential for future earnings and dividend stability. Investors should consider these factors carefully and monitor the company’s future financial performance to make informed decisions. If you want to diversify your portfolio with high dividend yield stocks, GuruFocus Premium users can explore opportunities using the High Dividend Yield Screener.
This article created by GuruFocus is intended to provide general insight and is not intended as financial advice. Our commentary is based on historical data and analyst forecasts using an unbiased methodology and is not intended to serve as specific investment guidance. It does not constitute a recommendation to buy or sell stocks, and does not take into account your individual investment objectives or financial situation. Our objective is to provide fundamental data-driven analysis over time. Please note that our analysis may not incorporate the latest announcements or qualitative information from price-sensitive companies. GuruFocus has no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
