“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