Two Harbors Reports Another Decline In Book Value. Is the Dividend Safe?
The Federal Reserve has been hiking rates aggressively, which has dented mortgage-backed securities (MBS) valuations, and mortgage originators have struggled with declining volume. Mortgage-backed securities -- bundles of mortgages combined to form bond-like securities -- have underperformed Treasuries and are the culprit behind some of the regional bank failures. Two Harbors (NYSE: TWO), a mortgage real estate investment trust (REIT), recently reported a large loss and offered investors few assurance that things will get better anytime soon or that its sky-high dividend -- which it just cut -- is safe from further reductions.