MFA Financial (NYSE:MFA – Get Free Report) and NexPoint Real Estate Finance (NYSE:NREF – Get Free Report) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their profitability, valuation, dividends, earnings, analyst recommendations, institutional ownership and risk.
Volatility & Risk
MFA Financial has a beta of 1.73, indicating that its stock price is 73% more volatile than the S&P 500. Comparatively, NexPoint Real Estate Finance has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of current recommendations for MFA Financial and NexPoint Real Estate Finance, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| MFA Financial | 0 | 4 | 3 | 0 | 2.43 |
| NexPoint Real Estate Finance | 0 | 4 | 0 | 0 | 2.00 |
Dividends
MFA Financial pays an annual dividend of $1.44 per share and has a dividend yield of 15.7%. NexPoint Real Estate Finance pays an annual dividend of $2.00 per share and has a dividend yield of 14.2%. MFA Financial pays out 169.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NexPoint Real Estate Finance pays out 71.2% of its earnings in the form of a dividend. MFA Financial has increased its dividend for 1 consecutive years. MFA Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation & Earnings
This table compares MFA Financial and NexPoint Real Estate Finance”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| MFA Financial | $249.92 million | 3.75 | $119.25 million | $0.85 | 10.78 |
| NexPoint Real Estate Finance | $151.95 million | 1.64 | $29.19 million | $2.81 | 5.01 |
MFA Financial has higher revenue and earnings than NexPoint Real Estate Finance. NexPoint Real Estate Finance is trading at a lower price-to-earnings ratio than MFA Financial, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares MFA Financial and NexPoint Real Estate Finance’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| MFA Financial | 17.62% | 8.61% | 1.39% |
| NexPoint Real Estate Finance | 102.28% | 17.52% | 1.14% |
Insider and Institutional Ownership
65.3% of MFA Financial shares are owned by institutional investors. Comparatively, 67.8% of NexPoint Real Estate Finance shares are owned by institutional investors. 0.8% of MFA Financial shares are owned by company insiders. Comparatively, 55.7% of NexPoint Real Estate Finance shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Summary
MFA Financial beats NexPoint Real Estate Finance on 11 of the 17 factors compared between the two stocks.
About MFA Financial
MFA Financial, Inc., together with its subsidiaries, operates as a real estate investment trust in the United States. It invests in residential mortgage securities, including non-agency mortgage-backed securities, agency MBS, and credit risk transfer securities; residential whole loans, including purchased performing loans, purchased credit deteriorated, and non-performing loans; and mortgage servicing rights related assets. The company was incorporated in 1997 and is based in New York, New York.
About NexPoint Real Estate Finance
NexPoint Real Estate Finance, Inc. operates as a commercial mortgage real estate investment trust in the United States. It focuses on originating, structuring, and investing in first-lien mortgage loans, mezzanine loans, preferred equity, convertible notes, multifamily properties, and common equity investments, as well as multifamily and single-family rental commercial mortgage-backed securities securitizations, multifamily structured credit risk notes, and mortgage-backed securities or target assets. The company has elected to be taxed as a real estate investment trust (REIT) and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. NexPoint Real Estate Finance, Inc. was incorporated in 2019 and is based in Dallas, Texas.
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