425: Two Harbors Declares Q4 Dividends Amidst UWM Merger

Two Harbors Investment Corp. announced its fourth quarter 2025 common and preferred stock dividends while reiterating its pending all-stock merger with UWM Holdings Corporation.

Summary

• Two Harbors declared a common stock dividend of $0.34 per share for the fourth quarter of 2025.
• The common stock dividend is payable on January 29, 2026, to common stockholders of record at the close of business on January 5, 2026.
• The company also declared preferred stock dividends for the fourth quarter of 2025:
• 8.125% Series A Cumulative Redeemable Preferred Stock: $0.50781 per share.
• 7.625% Series B Cumulative Redeemable Preferred Stock: $0.47656 per share.
• 7.25% Series C Cumulative Redeemable Preferred Stock: $0.58343 per share, with dividends accruing at a floating rate equal to the Three-Month CME Term SOFR plus 0.26161% plus 5.011%.
• The preferred dividends are payable on January 27, 2026, to applicable preferred stockholders of record at the close of business on January 12, 2026.
• Two Harbors has entered into a merger agreement with UWM Holdings Corporation (UWM) for an all-stock transaction, expected to close in the second quarter of 2026.
• Prior to the merger closing, Two Harbors intends to pay regular quarterly dividends consistent with past practice for all completed quarterly periods.
• The company does not intend to pay a partial dividend for the quarter in which the closing occurs if the closing does not happen as of quarter-end.

Sentiment

Score: 6

Explanation: The filing is neutral to slightly positive. It announces routine dividends and reiterates a previously disclosed merger, which is generally a positive strategic move, but also highlights numerous risks associated with the merger process.

Positives

• The declaration of regular quarterly common and preferred stock dividends indicates ongoing operational stability and commitment to shareholder returns prior to the merger.
• The company intends to continue paying regular quarterly dividends in the ordinary course consistent with past practice for all completed quarterly periods before the merger closes.

Negatives

• No partial dividend will be paid for the quarter in which the merger closing occurs if it does not happen at quarter-end, which could impact shareholder income for that specific period.

Risks

• Uncertainty regarding the expected timing and likelihood of completion of the proposed transaction.
• Challenges in successfully integrating the businesses of Two Harbors and UWM.
• The potential for any event, change, or circumstances to give rise to the termination of the proposed transaction.
• Risk of failure to receive required approvals, including stockholder approval, or to satisfy other closing conditions in a timely manner or at all.
• Risks related to the value of the UWM securities to be issued in the proposed transaction.
• Disruption of management's attention from ongoing business operations due to the proposed transaction.
• Potential adverse effects on the market price of common stock of UWM or Two Harbors due to transaction-related announcements.
• Risk that the proposed transaction could adversely affect the ability of Two Harbors and UWM to retain and hire key personnel.
• The outcome of any legal proceedings relating to the proposed transaction, including stockholder litigation.
• Restrictions during the pendency of the proposed transaction may impact Two Harbors or UWM's ability to pursue certain business opportunities or strategic transactions.
• Adverse effects from other economic, business, or competitive factors.
• Changes in future loan production, availability of suitable investment opportunities, interest rates, the yield curve, prepayment rates, and the availability and terms of financing.
• General economic conditions, market conditions, and conditions in the market for mortgage-related investments.
• Legislative and regulatory changes that could adversely affect the business of Two Harbors or UWM.

Future Outlook

The proposed all-stock merger with UWM Holdings Corporation is expected to close in the second quarter of 2026. Prior to closing, Two Harbors intends to pay regular quarterly dividends consistent with past practice for all completed quarterly periods, but will not pay a partial dividend for the closing quarter if it does not occur at quarter-end.

Management Comments

• TWO intends to pay regular quarterly dividends in the ordinary course consistent with past practice for all completed quarterly periods.
• TWO does not intend to pay a partial dividend for the quarter in which the closing occurs in the event the closing does not occur as of quarter-end.

Industry Context

Two Harbors is an MSR-focused REIT. The merger with UWM Holdings Corporation, a mortgage lender, suggests a strategic move to potentially integrate or expand capabilities within the broader mortgage and real estate investment sector. This could be a trend towards consolidation or vertical integration in the mortgage market, especially for REITs looking to enhance their asset base or operational synergies.

Legal Proceedings

• Potential stockholder litigation in connection with the proposed transaction is listed as a risk.

Stakeholder Impact

• Shareholders (Common Stock): Will receive a $0.34 per share dividend for Q4 2025. Will vote on the merger and will receive UWM stock if the merger closes. Face risks related to UWM stock value and merger completion.
• Shareholders (Preferred Stock): Will receive declared preferred dividends for Q4 2025.
• Employees: Risk of adverse effect on ability to retain and hire key personnel due to the proposed transaction.

Next Steps

• UWM will file a registration statement on Form S-4 with the SEC, including a preliminary proxy statement/prospectus.
• The proposed transaction will be submitted to the stockholders of Two Harbors for their approval.
• The merger is expected to close in the second quarter of 2026.

Key Dates

Recommendation

The filing primarily confirms routine quarterly dividends and reiterates a previously announced all-stock merger with UWM Holdings Corporation. While the dividends provide a consistent return, the merger introduces significant uncertainties, including the timing of completion, regulatory approvals, potential integration challenges, and the future value of UWM securities to be received by Two Harbors shareholders. Given these known factors and associated risks, a 'hold' recommendation is appropriate for investors to await further developments and clarity on the merger's execution and its long-term implications for the combined entity.

Keywords

Two Harbors Investment Corp., TWO, UWM Holdings Corporation, UWM, Merger, Dividend, Common Stock, Preferred Stock, REIT, Mortgage Servicing Rights, Residential Mortgage-Backed Securities, Financial Assets, SEC Filing