Head to Head Comparison: Highwoods Properties (NYSE:HIW) and Annaly Capital Management (NYSE:NLY)

Annaly Capital Management (NYSE:NLY) and Highwoods Properties (NYSE:HIW) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their earnings, risk, valuation, profitability, dividends, analyst recommendations and institutional ownership.

Earnings and Valuation

This table compares Annaly Capital Management and Highwoods Properties”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Annaly Capital Management	$4.84 billion	2.59	$1.00 billion	$1.59	13.61
Highwoods Properties	$825.86 million	3.81	$102.25 million	$0.95	30.76

Annaly Capital Management has higher revenue and earnings than Highwoods Properties. Annaly Capital Management is trading at a lower price-to-earnings ratio than Highwoods Properties, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Annaly Capital Management has a beta of 1.52, indicating that its share price is 52% more volatile than the S&P 500. Comparatively, Highwoods Properties has a beta of 1.24, indicating that its share price is 24% more volatile than the S&P 500.

Institutional and Insider Ownership

51.6% of Annaly Capital Management shares are owned by institutional investors. Comparatively, 96.3% of Highwoods Properties shares are owned by institutional investors. 0.2% of Annaly Capital Management shares are owned by insiders. Comparatively, 1.6% of Highwoods Properties shares are owned 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.

Profitability

This table compares Annaly Capital Management and Highwoods Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Annaly Capital Management	20.70%	14.95%	1.60%
Highwoods Properties	12.37%	4.33%	1.70%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Annaly Capital Management and Highwoods Properties, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Annaly Capital Management	0	2	8	0	2.80
Highwoods Properties	1	5	1	0	2.00

Annaly Capital Management presently has a consensus price target of $21.44, suggesting a potential downside of 0.88%. Highwoods Properties has a consensus price target of $30.71, suggesting a potential upside of 5.11%. Given Highwoods Properties’ higher probable upside, analysts clearly believe Highwoods Properties is more favorable than Annaly Capital Management.

Dividends

Annaly Capital Management pays an annual dividend of $2.60 per share and has a dividend yield of 12.0%. Highwoods Properties pays an annual dividend of $2.00 per share and has a dividend yield of 6.8%. Annaly Capital Management pays out 163.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Highwoods Properties pays out 210.5% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Annaly Capital Management beats Highwoods Properties on 10 of the 16 factors compared between the two stocks.

About Annaly Capital Management

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 Highwoods Properties

Highwoods Properties, Inc., headquartered in Raleigh, is a publicly-traded (NYSE:HIW), fully-integrated office real estate investment trust (REIT) that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. Highwoods is in the work-placemaking business. We believe that by creating environments and experiences where the best and brightest can achieve together what they cannot apart, we can deliver greater value to our customers, their teammates and, in turn, our stakeholders.