TIER REIT (NYSE: TIER) and Boston Properties (NYSE:BXP) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, risk, analyst recommendations, earnings and profitability.

Profitability

This table compares TIER REIT and Boston Properties’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TIER REIT 40.68% 12.86% 5.60%
Boston Properties 19.42% 6.43% 2.63%

Analyst Ratings

This is a summary of recent ratings for TIER REIT and Boston Properties, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TIER REIT 0 0 2 0 3.00
Boston Properties 0 8 4 0 2.33

TIER REIT presently has a consensus price target of $20.50, indicating a potential upside of 5.94%. Boston Properties has a consensus price target of $133.36, indicating a potential upside of 6.88%. Given Boston Properties’ higher probable upside, analysts plainly believe Boston Properties is more favorable than TIER REIT.

Earnings & Valuation

This table compares TIER REIT and Boston Properties’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
TIER REIT $242.82 million 3.81 -$29.41 million $1.82 10.63
Boston Properties $2.55 billion 7.55 $512.78 million $3.20 38.99

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

Insider & Institutional Ownership

56.3% of TIER REIT shares are held by institutional investors. Comparatively, 94.8% of Boston Properties shares are held by institutional investors. 1.2% of TIER REIT shares are held by company insiders. Comparatively, 0.9% of Boston Properties shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

TIER REIT pays an annual dividend of $0.72 per share and has a dividend yield of 3.7%. Boston Properties pays an annual dividend of $3.00 per share and has a dividend yield of 2.4%. TIER REIT pays out 39.6% of its earnings in the form of a dividend. Boston Properties pays out 93.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TIER REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

TIER REIT has a beta of 0.94, indicating that its share price is 6% less volatile than the S&P 500. Comparatively, Boston Properties has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500.

About TIER REIT

TIER REIT, Inc. is a real estate investment trust. The Company’s business consists of owning, acquiring, developing, operating, investing in, and disposing of real estate assets. The Company’s business is conducted through Tier Operating Partnership LP (Tier OP). As of December 31, 2016, the Company owned interests in 29 operating office properties, one non-operating property and one development property located in 13 markets throughout the United States. It owns properties located in metropolitan cities and suburban markets in the United States. The Company’s office properties include The Terrace Office Park, Domain 3, Domain 4, 5950 Sherry Lane, Burnett Plaza, Loop Central, One BriarLake Plaza, Three Eldridge Place, Eisenhower I, Forum Office Park, 500 E. Pratt, Woodcrest Corporate Center and 111 Woodcrest. The Company’s properties are located in Austin, Dallas, Houston, Charlotte, Nashville, Atlanta and Denver.

About Boston Properties

Boston Properties, Inc. is a real estate investment trust. The Company is an owner and developer of office properties in the United States. Its segments by geographic area are Boston, New York, San Francisco and Washington, DC. Its segments by property type include Office, Residential and Hotel. As of December 31, 2016, the Company owned or had interests in 174 commercial real estate properties, aggregating approximately 47.7 million net rentable square feet of primarily Class A office properties, including eight properties under construction/redevelopment totaling approximately 4.0 million net rentable square feet. As of December 31, 2016, its properties consisted of 164 Office properties (including six properties under construction/redevelopment); one hotel; five retail properties, and four residential properties (including two under construction). Its tenant base includes sectors, such as media technology, legal services, government/public administration and retail.

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