Realty Income (NYSE: O) and Washington Real Estate Investment Trust (NYSE:WRE) are both mid-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, profitability, analyst recommendations, valuation, earnings, risk and dividends.

Risk and Volatility

Realty Income has a beta of 0.29, indicating that its share price is 71% less volatile than the S&P 500. Comparatively, Washington Real Estate Investment Trust has a beta of 0.94, indicating that its share price is 6% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for Realty Income and Washington Real Estate Investment Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Realty Income 0 6 3 0 2.33
Washington Real Estate Investment Trust 1 1 2 0 2.25

Realty Income currently has a consensus price target of $66.60, indicating a potential upside of 26.33%. Washington Real Estate Investment Trust has a consensus price target of $31.00, indicating a potential upside of 7.42%. Given Realty Income’s stronger consensus rating and higher possible upside, analysts clearly believe Realty Income is more favorable than Washington Real Estate Investment Trust.

Earnings and Valuation

This table compares Realty Income and Washington Real Estate Investment Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Realty Income $1.10 billion 13.47 $315.57 million $1.22 43.21
Washington Real Estate Investment Trust $313.26 million 7.23 $119.33 million $0.30 96.20

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

Dividends

Realty Income pays an annual dividend of $2.55 per share and has a dividend yield of 4.8%. Washington Real Estate Investment Trust pays an annual dividend of $1.20 per share and has a dividend yield of 4.2%. Realty Income pays out 209.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Washington Real Estate Investment Trust pays out 400.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Realty Income has increased its dividend for 22 consecutive years. Realty Income is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

69.9% of Realty Income shares are owned by institutional investors. Comparatively, 85.5% of Washington Real Estate Investment Trust shares are owned by institutional investors. 0.3% of Realty Income shares are owned by company insiders. Comparatively, 0.6% of Washington Real Estate Investment Trust shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Realty Income and Washington Real Estate Investment Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Realty Income 29.37% 5.11% 2.64%
Washington Real Estate Investment Trust 7.10% 2.10% 0.98%

Summary

Realty Income beats Washington Real Estate Investment Trust on 13 of the 17 factors compared between the two stocks.

About Realty Income

Realty Income Corporation is a real estate investment trust (REIT). The Company is engaged in in-house acquisition, portfolio management, asset management, credit research, real estate research, legal, finance and accounting, information technology and capital markets capabilities. As of December 31, 2016, the Company owned a diversified portfolio of 4,944 properties located in 49 states and Puerto Rico, with over 83.0 million square feet of leasable space leased to 248 different commercial tenants doing business in 47 separate industries. As of December 31, 2016, of the 4,944 properties in the portfolio, 4,920, or 99.5%, were single-tenant properties, and the remaining were multi-tenant properties. As of December 31, 2016, of the 4,920 single-tenant properties, 4,836 were leased with a weighted average remaining lease term (excluding rights to extend a lease at the option of the tenant) of approximately 9.8 years.

About Washington Real Estate Investment Trust

Washington Real Estate Investment Trust is a self-administered equity real estate investment trust. The Company’s business consists of the ownership and operation of real property in the greater Washington metro region. The Company owns a diversified portfolio of office buildings, multifamily buildings and retail centers. The Company’s segments include office, multifamily and retail. The Company’s office properties provide office space for various types of businesses and professions. The Company’s multifamily properties provide rental housing for individuals and families throughout the Washington metro region. Its retail properties are typically grocery store anchored neighborhood centers that include other small shop tenants or regional power centers with various junior box tenants. As of April 4, 2017, it owned a diversified portfolio of 50 properties, totaling approximately 6.0 million square feet of commercial space and 4,480 residential units, and land held for development.

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