Head to Head Analysis: Two Harbors Investments (NYSE:TWO) vs. AG Mortgage Investment Trust (NYSE:MITT)

AG Mortgage Investment Trust (NYSE:MITT) and Two Harbors Investments (NYSE:TWO) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, dividends, profitability, valuation and earnings.

Dividends

AG Mortgage Investment Trust pays an annual dividend of $0.92 per share and has a dividend yield of 10.9%. Two Harbors Investments pays an annual dividend of $1.36 per share and has a dividend yield of 12.3%. AG Mortgage Investment Trust pays out 98.9% 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 Investments pays out -27.8% of its earnings in the form of a dividend. AG Mortgage Investment Trust has raised its dividend for 2 consecutive years and Two Harbors Investments has raised its dividend for 1 consecutive years. Two Harbors Investments is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent ratings and price targets for AG Mortgage Investment Trust and Two Harbors Investments, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AG Mortgage Investment Trust	0	3	5	0	2.63
Two Harbors Investments	2	7	0	0	1.78

AG Mortgage Investment Trust currently has a consensus target price of $9.17, suggesting a potential upside of 8.23%. Two Harbors Investments has a consensus target price of $12.88, suggesting a potential upside of 16.52%. Given Two Harbors Investments’ higher probable upside, analysts plainly believe Two Harbors Investments is more favorable than AG Mortgage Investment Trust.

Profitability

This table compares AG Mortgage Investment Trust and Two Harbors Investments’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AG Mortgage Investment Trust	11.03%	13.88%	0.59%
Two Harbors Investments	-109.90%	12.00%	1.29%

Risk & Volatility

AG Mortgage Investment Trust has a beta of 1.69, suggesting that its stock price is 69% more volatile than the S&P 500. Comparatively, Two Harbors Investments has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500.

Earnings & Valuation

This table compares AG Mortgage Investment Trust and Two Harbors Investments”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AG Mortgage Investment Trust	$408.49 million	0.66	$55.74 million	$0.93	9.11
Two Harbors Investments	$412.00 million	2.79	$298.17 million	($4.89)	-2.26

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

Insider & Institutional Ownership

27.3% of AG Mortgage Investment Trust shares are held by institutional investors. Comparatively, 64.2% of Two Harbors Investments shares are held by institutional investors. 3.2% of AG Mortgage Investment Trust shares are held by insiders. Comparatively, 0.7% of Two Harbors Investments shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

AG Mortgage Investment Trust beats Two Harbors Investments on 9 of the 17 factors compared between the two stocks.

About AG Mortgage Investment Trust

AG Mortgage Investment Trust, Inc. operates as a residential mortgage real estate investment trust in the United States. Its investment portfolio includes residential investments, including non-agency loans, agency-eligible loans, re-and non-performing loans, and non-agency residential mortgage-backed securities, as well as commercial loans and commercial mortgage-backed securities. The company 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. AG Mortgage Investment Trust, Inc. was incorporated in 2011 and is based in New York, New York.

About Two Harbors Investments

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.