HCP (NYSE: HCP) and Healthcare Trust of America (NYSE:HTA) are both mid-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, profitability, risk, analyst recommendations and dividends.

Dividends

HCP pays an annual dividend of $1.48 per share and has a dividend yield of 5.5%. Healthcare Trust of America pays an annual dividend of $1.22 per share and has a dividend yield of 4.1%. HCP pays out 133.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Healthcare Trust of America pays out 508.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. HCP has raised its dividend for 4 consecutive years. HCP is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares HCP and Healthcare Trust of America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HCP 27.31% 8.85% 3.62%
Healthcare Trust of America 6.75% 1.50% 0.75%

Insider & Institutional Ownership

89.7% of HCP shares are held by institutional investors. Comparatively, 97.8% of Healthcare Trust of America shares are held by institutional investors. 0.2% of HCP shares are held by company insiders. Comparatively, 1.5% of Healthcare Trust of America shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares HCP and Healthcare Trust of America’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
HCP $2.13 billion 5.98 $627.74 million $1.11 24.45
Healthcare Trust of America $460.93 million 13.10 $45.91 million $0.24 125.34

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

Analyst Ratings

This is a breakdown of recent recommendations for HCP and Healthcare Trust of America, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HCP 1 11 2 0 2.07
Healthcare Trust of America 0 3 7 1 2.82

HCP currently has a consensus price target of $31.50, indicating a potential upside of 16.06%. Healthcare Trust of America has a consensus price target of $34.33, indicating a potential upside of 14.14%. Given HCP’s higher possible upside, equities research analysts clearly believe HCP is more favorable than Healthcare Trust of America.

Volatility and Risk

HCP has a beta of 0.36, suggesting that its share price is 64% less volatile than the S&P 500. Comparatively, Healthcare Trust of America has a beta of 0.31, suggesting that its share price is 69% less volatile than the S&P 500.

Summary

HCP beats Healthcare Trust of America on 11 of the 18 factors compared between the two stocks.

About HCP

HCP, Inc. is a self-administered real estate investment trust. The Company invests in real estate serving the healthcare industry in the United States. The Company’s segments include senior housing triple-net (SH NNN), senior housing operating portfolio (SHOP), life science and medical office. Its senior housing facilities include independent living facilities, assisted living facilities, memory care facilities, care homes, and continuing care retirement communities. Its Life science properties contain laboratory and office space for biotechnology, medical device and pharmaceutical companies, scientific research institutions, government agencies and other organizations. Its Medical office buildings contain physicians’ offices and examination rooms, and may include pharmacies, hospital ancillary service space and outpatient services. As of December 31, 2016, it had interests in and managed 15 hospitals, 61 care homes in the United Kingdom and five post-acute/skilled nursing facilities.

About Healthcare Trust of America

Healthcare Trust of America, Inc. is a real estate investment trust. The Company is an owner and operator of medical office buildings (MOBs) in the United States. The Company focuses on owning and operating MOBs that serve healthcare delivery and are located on health system campuses, near university medical centers, or in community core outpatient locations. As of December 31, 2016, the Company’s portfolio consisted of approximately 17.7 million square feet of gross leasable area. As of December 31, 2016, the Company’s portfolio included MOBs, such as single-tenant and multi-tenant, and other healthcare facilities, such as hospitals and senior care. As of December 31, 2016, the Company’s portfolio had 355 buildings located in 31 states. As of December 31, 2016, the Company’s properties were located in various states of the United States, such as Alabama, Arizona, California, Colorado, Florida, Georgia, Hawaii, Illinois, Indiana, Kansas, Maryland, Michigan, Minnesota, Nevada and Utah.

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