Digital Realty Trust (NYSE: DLR) and VEREIT (NYSE:VER) are both mid-cap financials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, profitability, earnings, dividends and valuation.

Dividends

Digital Realty Trust pays an annual dividend of $3.72 per share and has a dividend yield of 3.3%. VEREIT pays an annual dividend of $0.55 per share and has a dividend yield of 7.0%. Digital Realty Trust pays out 302.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. VEREIT pays out -549.9% of its earnings in the form of a dividend. Digital Realty Trust has raised its dividend for 12 consecutive years. VEREIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Digital Realty Trust and VEREIT, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Digital Realty Trust 0 8 6 0 2.43
VEREIT 0 1 4 0 2.80

Digital Realty Trust currently has a consensus target price of $124.69, indicating a potential upside of 8.94%. VEREIT has a consensus target price of $10.00, indicating a potential upside of 26.42%. Given VEREIT’s stronger consensus rating and higher possible upside, analysts clearly believe VEREIT is more favorable than Digital Realty Trust.

Risk & Volatility

Digital Realty Trust has a beta of -0.1, meaning that its stock price is 110% less volatile than the S&P 500. Comparatively, VEREIT has a beta of 0.73, meaning that its stock price is 27% less volatile than the S&P 500.

Valuation and Earnings

This table compares Digital Realty Trust and VEREIT’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Digital Realty Trust $2.14 billion 10.98 $426.18 million $1.23 93.06
VEREIT $1.45 billion 5.30 -$195.86 million ($0.10) -79.09

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

Profitability

This table compares Digital Realty Trust and VEREIT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Digital Realty Trust 11.71% 5.15% 1.97%
VEREIT -3.76% -0.61% -0.34%

Institutional & Insider Ownership

98.5% of Digital Realty Trust shares are held by institutional investors. Comparatively, 85.3% of VEREIT shares are held by institutional investors. 0.4% of Digital Realty Trust shares are held by insiders. Comparatively, 0.1% of VEREIT shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Digital Realty Trust beats VEREIT on 12 of the 17 factors compared between the two stocks.

Digital Realty Trust Company Profile

Digital Realty Trust, Inc. is a real estate investment trust (REIT). The Company is engaged in the business of owning, acquiring, developing and operating data centers. The Company is focused on providing data center and colocation solutions for domestic and international tenants across a range of industry verticals ranging from financial services, cloud and information technology services, to manufacturing, energy, healthcare and consumer products. As of December 31, 2016, its portfolio consisted of 145 operating properties, including 14 properties held as investments in unconsolidated joint ventures, of which 104 are located throughout the United States, 32 are located in Europe, four are located in Asia, three are located in Australia and two are located in Canada. It is a general partner of Digital Realty Trust, L.P. As of December 31, 2016, it owned an approximate 98.5% common general partnership interest in Digital Realty Trust, L.P.

VEREIT Company Profile

VEREIT, Inc. is a full-service real estate operating company. The Company owns and manages a diversified portfolio of retail, restaurant, office and industrial real estate assets. It operates through two segments: real estate investment (REI) segment and its investment management segment, Cole Capital. The Company manages real estate investments on behalf of the Cole Capital. The Cole Capital segment sponsors and manages direct investment real estate programs, which primarily include publicly registered, non-traded real estate investment trusts (REITs). The Cole Capital segment’s operations are conducted through Cole Capital Advisors, Inc. (CCA), which is a subsidiary of the Operating Partnership. The Company’s portfolio consists of Industrial distribution, shopping centers and single-tenant retail. The Company serves in various industries, such as casual dining restaurants, manufacturing, quick service restaurants, grocery and super market, home and garden retail and logistics.

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