Two Harbors Investment (NYSE:TWO – Get Free Report) and New York Mortgage Trust (NASDAQ:NYMT – Get Free Report) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, dividends, profitability, analyst recommendations, valuation, earnings and institutional ownership.
Analyst Recommendations
This is a breakdown of current recommendations for Two Harbors Investment and New York Mortgage Trust, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Two Harbors Investment | 0 | 7 | 1 | 0 | 2.13 |
| New York Mortgage Trust | 0 | 1 | 1 | 0 | 2.50 |
Two Harbors Investment presently has a consensus price target of $14.50, indicating a potential upside of 16.28%. New York Mortgage Trust has a consensus price target of $10.83, indicating a potential upside of 52.58%. Given New York Mortgage Trust’s stronger consensus rating and higher possible upside, analysts clearly believe New York Mortgage Trust is more favorable than Two Harbors Investment.
Volatility and Risk
Dividends
Two Harbors Investment pays an annual dividend of $1.80 per share and has a dividend yield of 14.4%. New York Mortgage Trust pays an annual dividend of $0.80 per share and has a dividend yield of 11.3%. Two Harbors Investment pays out -90.0% of its earnings in the form of a dividend. New York Mortgage Trust pays out -80.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Two Harbors Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider & Institutional Ownership
64.2% of Two Harbors Investment shares are owned by institutional investors. Comparatively, 54.9% of New York Mortgage Trust shares are owned by institutional investors. 0.6% of Two Harbors Investment shares are owned by insiders. Comparatively, 1.2% of New York Mortgage Trust shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares Two Harbors Investment and New York Mortgage Trust’s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Two Harbors Investment | $480.36 million | 2.69 | -$106.37 million | ($2.00) | -6.24 |
| New York Mortgage Trust | $308.67 million | 2.10 | -$48.67 million | ($0.99) | -7.17 |
New York Mortgage Trust has lower revenue, but higher earnings than Two Harbors Investment. New York Mortgage Trust is trading at a lower price-to-earnings ratio than Two Harbors Investment, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Two Harbors Investment and New York Mortgage Trust’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Two Harbors Investment | -22.14% | 2.47% | 0.28% |
| New York Mortgage Trust | -18.82% | 0.87% | 0.15% |
Summary
Two Harbors Investment beats New York Mortgage Trust on 8 of the 15 factors compared between the two stocks.
About Two Harbors Investment
Two Harbors Investment Corp. invests in, finances, and manages mortgage servicing rights (MSRs), agency residential mortgage-backed securities (RMBS), and other financial assets through RoundPoint in the United States. The company target assets include agency RMBS collateralized by fixed rate mortgage loans, adjustable rate mortgage loans, hybrid mortgage loans, or derivatives; and other assets, such as financial and mortgage-related assets, including non-agency securities and non-hedging transactions. It qualifies as a REIT for federal income tax purposes. As a REIT, the company must distribute at least 90% of annual taxable income to its stockholders. Two Harbors Investment Corp. was incorporated in 2009 and is headquartered in St. Louis Park, Minnesota.
About New York Mortgage Trust
New York Mortgage Trust, Inc. acquires, invests in, finances, and manages mortgage-related single-family and multi-family residential assets in the United States. Its targeted investments include residential loans, including business purpose loans; structured multi-family property investments, such as preferred equity in, and mezzanine loans to owners of multi-family properties; non-agency residential mortgage-backed securities (RMBS); agency RMBS; commercial mortgage-backed securities (CMBS); single-family rental properties; and other mortgage, residential housing, and credit-related assets. The company also qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. New York Mortgage Trust, Inc. was incorporated in 2003 and is headquartered in New York, New York.
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