New York Mortgage Trust (NASDAQ:NYMT – Get Free Report) and Two Harbors Investment (NYSE:TWO – Get Free Report) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.
Institutional and Insider Ownership
54.9% of New York Mortgage Trust shares are owned by institutional investors. Comparatively, 64.2% of Two Harbors Investment shares are owned by institutional investors. 1.2% of New York Mortgage Trust shares are owned by insiders. Comparatively, 0.6% of Two Harbors Investment shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares New York Mortgage Trust and Two Harbors Investment’s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| New York Mortgage Trust | $308.67 million | 2.10 | -$48.67 million | ($0.99) | -7.17 |
| Two Harbors Investment | $480.36 million | 2.69 | -$106.37 million | ($2.00) | -6.24 |
Analyst Recommendations
This is a breakdown of current ratings and price targets for New York Mortgage Trust and Two Harbors Investment, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| New York Mortgage Trust | 0 | 1 | 1 | 0 | 2.50 |
| Two Harbors Investment | 0 | 7 | 1 | 0 | 2.13 |
New York Mortgage Trust currently has a consensus target price of $10.83, suggesting a potential upside of 52.58%. Two Harbors Investment has a consensus target price of $14.50, suggesting a potential upside of 16.28%. 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.
Risk and Volatility
New York Mortgage Trust has a beta of 1.92, meaning that its share price is 92% more volatile than the S&P 500. Comparatively, Two Harbors Investment has a beta of 1.87, meaning that its share price is 87% more volatile than the S&P 500.
Dividends
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 an annual dividend of $1.80 per share and has a dividend yield of 14.4%. New York Mortgage Trust pays out -80.8% of its earnings in the form of a dividend. Two Harbors Investment pays out -90.0% 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.
Profitability
This table compares New York Mortgage Trust and Two Harbors Investment’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| New York Mortgage Trust | -18.82% | 0.87% | 0.15% |
| Two Harbors Investment | -22.14% | 2.47% | 0.28% |
Summary
Two Harbors Investment beats New York Mortgage Trust on 8 of the 15 factors compared between the two stocks.
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.
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.
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