Critical Survey: Realty Income (NYSE:O) versus Ventas (NYSE:VTR)

Realty Income (NYSE:OGet Rating) and Ventas (NYSE:VTRGet Rating) are both large-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, risk, valuation, institutional ownership, earnings and profitability.

Risk & Volatility

Realty Income has a beta of 0.8, suggesting that its share price is 20% less volatile than the S&P 500. Comparatively, Ventas has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500.

Profitability

This table compares Realty Income and Ventas’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Realty Income 17.25% 2.32% 1.31%
Ventas 1.28% 0.46% 0.20%

Valuation & Earnings

This table compares Realty Income and Ventas’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Realty Income $2.08 billion 20.75 $359.46 million $0.94 76.80
Ventas $3.83 billion 6.39 $49.01 million $0.14 437.25

Realty Income has higher earnings, but lower revenue than Ventas. Realty Income is trading at a lower price-to-earnings ratio than Ventas, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

82.8% of Realty Income shares are owned by institutional investors. Comparatively, 92.6% of Ventas shares are owned by institutional investors. 0.1% of Realty Income shares are owned by company insiders. Comparatively, 1.3% of Ventas shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Realty Income pays an annual dividend of $2.96 per share and has a dividend yield of 4.1%. Ventas pays an annual dividend of $1.80 per share and has a dividend yield of 2.9%. Realty Income pays out 314.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ventas pays out 1,285.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Realty Income has raised its dividend for 28 consecutive years. Realty Income is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings for Realty Income and Ventas, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Realty Income 0 3 5 0 2.63
Ventas 0 5 10 1 2.75

Realty Income currently has a consensus price target of $77.80, suggesting a potential upside of 7.77%. Ventas has a consensus price target of $62.90, suggesting a potential upside of 2.76%. Given Realty Income’s higher probable upside, research analysts plainly believe Realty Income is more favorable than Ventas.

Summary

Realty Income beats Ventas on 10 of the 18 factors compared between the two stocks.

Realty Income Company Profile (Get Rating)

Realty Income, The Monthly Dividend Company, is an S&P 500 company dedicated to providing stockholders with dependable monthly income. The company is structured as a REIT, and its monthly dividends are supported by the cash flow from over 6,500 real estate properties owned under long-term lease agreements with our commercial clients. To date, the company has declared 608 consecutive common stock monthly dividends throughout its 52-year operating history and increased the dividend 109 times since Realty Income's public listing in 1994 (NYSE: O). The company is a member of the S&P 500 Dividend Aristocrats index. Additional information about the company can be obtained from the corporate website at www.realtyincome.com.

Ventas Company Profile (Get Rating)

Ventas, an S&P 500 company, operates at the intersection of two powerful and dynamic industries – healthcare and real estate. As one of the world's foremost Real Estate Investment Trusts (REIT), we use the power of capital to unlock the value of real estate, partnering with leading care providers, developers, research and medical institutions, innovators and healthcare organizations whose success is buoyed by the demographic tailwind of an aging population. For more than twenty years, Ventas has followed a successful strategy that endures: combining a high-quality diversified portfolio of properties and capital sources to manage through cycles, working with industry leading partners, and a collaborative and experienced team focused on producing consistent growing cash flows and superior returns on a strong balance sheet, ultimately rewarding Ventas shareholders. As of September 30, 2020, Ventas owned or managed through unconsolidated joint ventures approximately 1,200 properties.

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