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Two Harbors Reports Another Decline In Book Value. Is the Dividend Safe?

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.