NexPoint Real Estate Finance (NYSE:NREF) vs. Annaly Capital Management (NYSE:NLY) Financial Review

Annaly Capital Management (NYSE:NLY – Get Free Report) and NexPoint Real Estate Finance (NYSE:NREF – Get Free Report) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, valuation, dividends, profitability and analyst recommendations.
Institutional and Insider Ownership
51.6% of Annaly Capital Management shares are owned by institutional investors. Comparatively, 67.8% of NexPoint Real Estate Finance shares are owned by institutional investors. 0.2% of Annaly Capital Management 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, endowments and large money managers believe a company will outperform the market over the long term.
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Analyst Ratings
This is a breakdown of recent recommendations and price targets for Annaly Capital Management and NexPoint Real Estate Finance, as provided by MarketBeat.
Annaly Capital Management presently has a consensus target price of $20.81, indicating a potential downside of 2.70%. NexPoint Real Estate Finance has a consensus target price of $14.75, indicating a potential upside of 2.64%. Given NexPoint Real Estate Finance’s higher possible upside, analysts plainly believe NexPoint Real Estate Finance is more favorable than Annaly Capital Management.
Profitability
This table compares Annaly Capital Management and NexPoint Real Estate Finance’s net margins, return on equity and return on assets.
Dividends
Annaly Capital Management pays an annual dividend of $2.80 per share and has a dividend yield of 13.1%. NexPoint Real Estate Finance pays an annual dividend of $2.00 per share and has a dividend yield of 13.9%. Annaly Capital Management pays out 277.2% 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 83.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Annaly Capital Management has raised its dividend for 2 consecutive years. NexPoint Real Estate Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk and Volatility
Annaly Capital Management has a beta of 1.24, indicating that its stock price is 24% more volatile than the S&P 500. Comparatively, NexPoint Real Estate Finance has a beta of 1.28, indicating that its stock price is 28% more volatile than the S&P 500.
Earnings & Valuation
This table compares Annaly Capital Management and NexPoint Real Estate Finance”s top-line revenue, earnings per share and valuation.
Annaly Capital Management has higher revenue and earnings than NexPoint Real Estate Finance. NexPoint Real Estate Finance is trading at a lower price-to-earnings ratio than Annaly Capital Management, indicating that it is currently the more affordable of the two stocks.
Summary
NexPoint Real Estate Finance beats Annaly Capital Management on 10 of the 17 factors compared between the two stocks.
About Annaly Capital Management
(Get Free Report)
Annaly Capital Management, Inc., a diversified capital manager, engages in mortgage finance. The company invests in agency mortgage-backed securities collateralized by residential mortgages; non-agency residential whole loans and securitized products within the residential and commercial markets; mortgage servicing rights; agency commercial mortgage-backed securities; to-be-announced forward contracts; residential mortgage loans; and agency or private label credit risk transfer securities. It has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders. The company was incorporated in 1996 and is based in New York, New York.
About NexPoint Real Estate Finance
(Get Free Report)
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.