Home book seller These 2 mortgage REITs have yields above 15% and are trading below book value – AG Mortgage Investment (NYSE:MITT), Two Harbors Investment (NYSE:TWO)

These 2 mortgage REITs have yields above 15% and are trading below book value – AG Mortgage Investment (NYSE:MITT), Two Harbors Investment (NYSE:TWO)


When investing in mortgage real estate investment trusts, one advantage investors should be aware of is that they generally have higher yields than equity REITs and should never trade at a premium to their book value. higher than the dividend yield. Mortgage REITs generally earn income from interest on their mortgages and may be exposed to greater credit risk depending on the investment.

Over the past three years, mortgage REITs have posted annualized returns of 10.3% and tend to outperform equity REITs during periods of rising interest rates. This is because in times of rising interest rates, the cost of capital rises, which may incentivize REITs to dilute shareholders by issuing more equity through common stock.

Additionally, mortgage REITs have the ability to issue new debt through senior secured notes without having to issue new equity.

Here are two mortgage REITs with high yields that are trading below book value.

AG Mortgage Investment Trust Inc. GLOVE offers a dividend yield of 21.59% or 84 cents per share per year, using quarterly payments, with an inconsistent history of increasing its dividends. AG Mortgage Investment is a mortgage REIT focused on investing, acquiring and managing a diversified portfolio of residential mortgage assets, other real estate-related securities and financial assets, which the company refers to as its target assets.

As of June 30, 2022, AG Mortgage had a carrying value of $11.48 compared to a carrying value of $13.37 as of March 31, 2022.

“The negative impact on our book value this quarter is due to unrealized mark-to-market losses on our warehouse loan portfolio due to historically wide spreads. However, this challenging market environment also presents us with an opportunity to improved investment that we are well positioned to take advantage of it,” said David RobertChief executive officer.

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Two Harbors Investment Corp. OF THEM offers a dividend yield of 21.35% or 68 cents per share per year, making quarterly payments, with a history of increasing its dividend once in the past year. Two Harbors Investment is a real estate investment trust primarily focused on investing, financing and managing residential mortgage-backed securities, residential mortgages, mortgage servicing rights and commercial real estate.

“As mortgage spreads continued to widen to historically attractive levels, we deployed capital into residential mortgage-backed securities and took advantage of relative value opportunities across the stack,” said Bill GreenbergPresident, CEO and Chief Information Officer of Two Harbors.

On Sept. 21, Two Harbors’ board of directors approved a 1-for-4 reverse stock split of the company’s common stock, which essentially means merging four existing shares into one.
In the second quarter, Two Harbors had a book value of $5.10 per common share, representing a 4.7% quarterly return on book value.