Contrasting Two Harbors Investment (NYSE:TWO) & Vornado Realty Trust (NYSE:VNO)

Two Harbors Investment (NYSE:TWO) and Vornado Realty Trust (NYSE:VNO) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, profitability, dividends, analyst recommendations, risk, valuation and institutional ownership.

Profitability

This table compares Two Harbors Investment and Vornado Realty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Two Harbors Investment 25.07% 10.64% 1.28%
Vornado Realty Trust 163.55% 4.54% 1.51%

Dividends

Two Harbors Investment pays an annual dividend of $1.60 per share and has a dividend yield of 35.1%. Vornado Realty Trust pays an annual dividend of $2.64 per share and has a dividend yield of 7.1%. Two Harbors Investment pays out 116.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Vornado Realty Trust pays out 75.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Two Harbors Investment has raised its dividend for 3 consecutive years and Vornado Realty Trust has raised its dividend for 1 consecutive years. Two Harbors Investment is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Two Harbors Investment and Vornado Realty Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Two Harbors Investment 0 1 6 0 2.86
Vornado Realty Trust 1 7 2 0 2.10

Two Harbors Investment currently has a consensus target price of $14.74, indicating a potential upside of 223.31%. Vornado Realty Trust has a consensus target price of $71.75, indicating a potential upside of 93.71%. Given Two Harbors Investment’s stronger consensus rating and higher possible upside, equities analysts clearly believe Two Harbors Investment is more favorable than Vornado Realty Trust.

Insider & Institutional Ownership

60.9% of Two Harbors Investment shares are owned by institutional investors. Comparatively, 86.9% of Vornado Realty Trust shares are owned by institutional investors. 0.9% of Two Harbors Investment shares are owned by company insiders. Comparatively, 8.6% of Vornado Realty Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

Two Harbors Investment has a beta of 0.74, meaning that its stock price is 26% less volatile than the S&P 500. Comparatively, Vornado Realty Trust has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500.

Valuation & Earnings

This table compares Two Harbors Investment and Vornado Realty Trust’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Two Harbors Investment $994.69 million 1.25 $323.96 million $1.37 3.33
Vornado Realty Trust $1.92 billion 3.68 $3.15 billion $3.49 10.61

Vornado Realty Trust has higher revenue and earnings than Two Harbors Investment. Two Harbors Investment is trading at a lower price-to-earnings ratio than Vornado Realty Trust, indicating that it is currently the more affordable of the two stocks.

Summary

Vornado Realty Trust beats Two Harbors Investment on 10 of the 17 factors compared between the two stocks.

Two Harbors Investment Company Profile

Two Harbors Investment Corp. operates as a real estate investment trust (REIT) that focuses on investing in, financing, and managing residential mortgage-backed securities (RMBS), non-agency securities, mortgage servicing rights, and other financial assets in the United States. Its target assets include agency RMBS collateralized by fixed rate mortgage loans, adjustable rate mortgage loans, and hybrid adjustable-rate mortgage (ARMs); non-agency securities collateralized by prime mortgage loans, Alt-A mortgage loans, pay-option ARM loans, and subprime mortgage loans; and other assets, such as financial and mortgage-related assets, as well as residential mortgage loans and non-hedging transactions. The company qualifies as a REIT for federal income tax purposes. As a REIT, the company would not be subject to federal income tax, if it distributes at least 90% of net taxable income to its stockholders. Two Harbors Investment Corp. was incorporated in 2009 and is headquartered in New York, New York.

Vornado Realty Trust Company Profile

Vornado's portfolio is concentrated in the nation's key market New York City along with the premier asset in both Chicago and San Francisco. Vornado is also the real estate industry leader in sustainability policy. The company owns and manages over 23 million square feet of LEED certified buildings and received the Energy Star Partner of the Year Award, Sustained Excellence 2019. In 2012, Vornado commemorated 50 years on the NYSE.

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