Apollo Residential Mortgage (NYSE: AMTG) and New Residential Investment Corp. (NYSE:NRZ) are both mortgage reits companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.

Valuation and Earnings

This table compares Apollo Residential Mortgage and New Residential Investment Corp.’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Apollo Residential Mortgage N/A N/A N/A ($0.94) -14.51
New Residential Investment Corp. $1.08 billion 4.93 $504.45 million $3.09 5.59

New Residential Investment Corp. has higher revenue and earnings than Apollo Residential Mortgage. Apollo Residential Mortgage is trading at a lower price-to-earnings ratio than New Residential Investment Corp., indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

48.1% of New Residential Investment Corp. shares are held by institutional investors. 4.0% of New Residential Investment Corp. shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for Apollo Residential Mortgage and New Residential Investment Corp., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Apollo Residential Mortgage 0 0 0 0 N/A
New Residential Investment Corp. 0 1 6 0 2.86

New Residential Investment Corp. has a consensus target price of $18.15, suggesting a potential upside of 5.10%. Given New Residential Investment Corp.’s higher probable upside, analysts clearly believe New Residential Investment Corp. is more favorable than Apollo Residential Mortgage.

Risk & Volatility

Apollo Residential Mortgage has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500. Comparatively, New Residential Investment Corp. has a beta of 1.04, suggesting that its share price is 4% more volatile than the S&P 500.

Profitability

This table compares Apollo Residential Mortgage and New Residential Investment Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Apollo Residential Mortgage 56.35% 10.11% 2.60%
New Residential Investment Corp. 60.06% 19.38% 3.99%

Dividends

Apollo Residential Mortgage pays an annual dividend of $1.92 per share and has a dividend yield of 14.1%. New Residential Investment Corp. pays an annual dividend of $2.00 per share and has a dividend yield of 11.6%. Apollo Residential Mortgage pays out -204.3% of its earnings in the form of a dividend. New Residential Investment Corp. pays out 64.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Apollo Residential Mortgage has raised its dividend for 2 consecutive years and New Residential Investment Corp. has raised its dividend for 3 consecutive years. Apollo Residential Mortgage is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

New Residential Investment Corp. beats Apollo Residential Mortgage on 11 of the 13 factors compared between the two stocks.

Apollo Residential Mortgage Company Profile

Apollo Residential Mortgage, Inc. is a holding company that conducts its business primarily through ARM Operating, LLC and other operating subsidiaries. The Company is primarily engaged in the business of investing in residential mortgage assets in the United States. The Company seeks to generate risk-adjusted returns from its assets to its stockholders over the long term, primarily through dividend distributions and secondarily through capital appreciation. The Company’s portfolio consists of agency residential mortgage-backed securities (RMBS), non-Agency RMBS; securitized mortgage loans, and other mortgage and mortgage related investment securities and other mortgage related investments. The Company may invest in a range of other residential mortgage and mortgage-related assets. The Company is externally managed and advised by ARM Manager, LLC, an indirect subsidiary of Apollo Global Management, LLC.

New Residential Investment Corp. Company Profile

New Residential Investment Corp. is a real estate investment trust (REIT). The Company focuses on investing in, and managing, investments related to residential real estate. The Company’s segments include investments in excess mortgage servicing rights (Excess MSRs); investments in mortgage servicing rights (MSRs); investments in servicer advances; investments in real estate securities; investments in residential mortgage loans; investments in consumer loans, and corporate. Its portfolio includes mortgage servicing related assets, residential mortgage backed securities (RMBS), residential mortgage loans and other investments. The Company’s servicing related assets include its investments in Excess MSRs, MSRs and servicer advances. The Company invests in agency RMBS and non-agency RMBS. The Company’s other investments consist of consumer loans.

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