Head to Head Contrast: NexPoint Real Estate Finance (NYSE:NREF) and Dynex Capital (NYSE:DX)

Dynex Capital (NYSE:DX) and NexPoint Real Estate Finance (NYSE:NREF) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, earnings, profitability, risk, analyst recommendations and dividends.

Earnings & Valuation

This table compares Dynex Capital and NexPoint Real Estate Finance”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dynex Capital	$319.53 million	6.70	$113.90 million	$1.48	9.85
NexPoint Real Estate Finance	$72.51 million	3.51	$29.19 million	$2.81	5.12

Dynex Capital has higher revenue and earnings than NexPoint Real Estate Finance. NexPoint Real Estate Finance is trading at a lower price-to-earnings ratio than Dynex Capital, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

38.3% of Dynex Capital shares are held by institutional investors. Comparatively, 67.8% of NexPoint Real Estate Finance shares are held by institutional investors. 1.0% of Dynex Capital shares are held by insiders. Comparatively, 54.0% of NexPoint Real Estate Finance shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings for Dynex Capital and NexPoint Real Estate Finance, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dynex Capital	0	3	2	0	2.40
NexPoint Real Estate Finance	0	3	0	0	2.00

Dynex Capital currently has a consensus target price of $13.92, suggesting a potential downside of 4.52%. NexPoint Real Estate Finance has a consensus target price of $14.50, suggesting a potential upside of 0.87%. Given NexPoint Real Estate Finance’s higher possible upside, analysts plainly believe NexPoint Real Estate Finance is more favorable than Dynex Capital.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Dynex Capital	41.53%	6.65%	0.89%
NexPoint Real Estate Finance	102.28%	17.52%	1.14%

Risk and Volatility

Dynex Capital has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500. Comparatively, NexPoint Real Estate Finance has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500.

Dividends

Dynex Capital pays an annual dividend of $2.04 per share and has a dividend yield of 14.0%. NexPoint Real Estate Finance pays an annual dividend of $2.00 per share and has a dividend yield of 13.9%. Dynex Capital pays out 137.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NexPoint Real Estate Finance pays out 71.2% of its earnings in the form of a dividend. Dynex Capital has increased its dividend for 5 consecutive years. Dynex Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

NexPoint Real Estate Finance beats Dynex Capital on 9 of the 17 factors compared between the two stocks.

About Dynex Capital

Dynex Capital, Inc., a mortgage real estate investment trust, invests in mortgage-backed securities (MBS) on a leveraged basis in the United States. It invests in agency and non-agency MBS consisting of residential MBS, commercial MBS (CMBS), and CMBS interest-only securities. Agency MBS have a guaranty of principal payment by an agency of the U.S. government or a U.S. government-sponsored entity, such as Fannie Mae and Freddie Mac. Non-Agency MBS have no such guaranty of payment. The company has qualified as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders as dividends. Dynex Capital, Inc. was incorporated in 1987 and is headquartered in Glen Allen, Virginia.

About NexPoint Real Estate Finance

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.