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A High-Yield REIT: Two Harbors Investment Corp. (TWO)

Two Harbors Investment Corp. (TWO) is a mortgage REIT (or mREIT, as it is sometimes known). It buys, owns and manages both agency-backed (guaranteed by Fannie and Freddie) and non-agency-backed residential mortgages. It then generates revenues for shareholders primarily by the interest it earns on the mortgage loans. “Two...

Two Harbors Investment Corp. (TWO) is a mortgage REIT (or mREIT, as it is sometimes known). It buys, owns and manages both agency-backed (guaranteed by Fannie and Freddie) and non-agency-backed residential mortgages. It then generates revenues for shareholders primarily by the interest it earns on the mortgage loans.

“Two Harbors has a total portfolio of residential mortgage-backed securities of over $15 billion—84% of which are agency-backed mortgage bonds and the remaining 16% are non-agency-backed (privately issued) mortgage bonds. And it’s been a great strategy. Through October 2009 and November 2012, TWO’s total shareholder returns have been 77%. And as of October 2012, its year-to-date returns were 32%. At writing, this stock trades at $10.95 and pays a quarterly dividend of $0.55—giving it a dividend yield of 20%. If you want a way to play housing without getting your hands dirty, this is a great option. Two Harbors will also own a 47.7% stake in Silver Bay Realty Trust (SBY). ... Owning shares in both REITs is a great way to play the U.S. housing market as it slowly heals.”

Andrew Snyder, Unconventional Wealth, February 2013

Andrew Snyder is the Editorial Director of Insiders Strategy Group and Editor of Unconventional Wealth. Mr. Snyder entered the world of finance as an advisor working with one of the nation’s largest investment firms. He specialized in handling the vast portfolios of wealthy clients, where he excelled at making them even wealthier. In the years since getting on the inside of the industry, Mr. Snyder earned his MBA, published an award-winning book and has been published in numerous publications--with over 1,500 articles and columns in his name. He has also appeared on Fox News and other media outlets.