Dynex Capital (NYSE: DX) and KKR Real Estate Finance Trust (NYSE:KREF) are both small-cap financials companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, dividends, profitability, earnings, risk, analyst recommendations and institutional ownership.

Profitability

This table compares Dynex Capital and KKR Real Estate Finance Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dynex Capital 86.86% 11.08% 1.27%
KKR Real Estate Finance Trust 77.41% 6.08% 0.75%

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Dynex Capital and KKR Real Estate Finance Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dynex Capital 0 2 1 0 2.33
KKR Real Estate Finance Trust 0 3 0 0 2.00

Dynex Capital currently has a consensus price target of $7.38, suggesting a potential upside of 6.12%. KKR Real Estate Finance Trust has a consensus price target of $22.50, suggesting a potential upside of 13.18%. Given KKR Real Estate Finance Trust’s higher probable upside, analysts plainly believe KKR Real Estate Finance Trust is more favorable than Dynex Capital.

Institutional and Insider Ownership

36.2% of Dynex Capital shares are owned by institutional investors. Comparatively, 65.7% of KKR Real Estate Finance Trust shares are owned by institutional investors. 7.1% of Dynex Capital shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Dynex Capital pays an annual dividend of $0.72 per share and has a dividend yield of 10.4%. KKR Real Estate Finance Trust pays an annual dividend of $1.48 per share and has a dividend yield of 7.4%. Dynex Capital pays out 50.0% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Dynex Capital and KKR Real Estate Finance Trust’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dynex Capital $91.90 million 4.96 $43.09 million $1.44 4.83
KKR Real Estate Finance Trust $41.19 million 25.91 $31.15 million N/A N/A

Dynex Capital has higher revenue and earnings than KKR Real Estate Finance Trust.

Summary

Dynex Capital beats KKR Real Estate Finance Trust on 9 of the 13 factors compared between the two stocks.

About Dynex Capital

Dynex Capital, Inc. is an internally managed mortgage real estate investment trust, which invests in residential and commercial mortgage securities on a leveraged basis. The Company’s objective is to provide attractive risk-adjusted returns to its shareholders over the long term that is reflective of a leveraged fixed income portfolio with a focus on capital preservation. It seeks to provide returns to its shareholders through regular quarterly dividends and through capital appreciation. It invests in Agency and non-Agency mortgage-backed securities (MBS). MBS consists of residential MBS (RMBS), commercial MBS (CMBS) and CMBS interest-only securities. Agency MBS have a guaranty of principal payment by an agency of the United States Government or a government-sponsored entity (GSE), such as Fannie Mae and Freddie Mac.

About KKR Real Estate Finance Trust

KKR Real Estate Finance Trust Inc is a real estate finance company that focuses primarily on originating and acquiring senior mortgage loans secured by commercial real estate assets (CRE). KKR manages investments across multiple asset classes, including private equity, real estate, energy, infrastructure, credit and hedge funds. The Company’s investment strategy is to originate or acquire senior mortgage loans collateralized by institutional-quality CRE assets. Its target assets also include mezzanine loans, preferred equity and other debt-oriented instruments. The Company’s investment objective is capital preservation and generating attractive risk-adjusted returns for its stockholders over the long term, primarily through dividends.

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