Realty Income Corporation (NYSE: O) and Gladstone Commercial Corporation (NASDAQ:GOOD) are both financials companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, analyst recommendations and institutional ownership.

Dividends

Realty Income Corporation pays an annual dividend of $2.54 per share and has a dividend yield of 4.5%. Gladstone Commercial Corporation pays an annual dividend of $1.50 per share and has a dividend yield of 6.6%. Realty Income Corporation pays out 208.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Gladstone Commercial Corporation pays out -3,750.0% of its earnings in the form of a dividend. Realty Income Corporation has increased its dividend for 21 consecutive years. Gladstone Commercial Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

67.5% of Realty Income Corporation shares are held by institutional investors. Comparatively, 51.0% of Gladstone Commercial Corporation shares are held by institutional investors. 0.3% of Realty Income Corporation shares are held by company insiders. Comparatively, 2.2% of Gladstone Commercial Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Realty Income Corporation and Gladstone Commercial Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Realty Income Corporation 29.37% 5.11% 2.64%
Gladstone Commercial Corporation 10.59% 3.96% 1.13%

Analyst Recommendations

This is a summary of current recommendations and price targets for Realty Income Corporation and Gladstone Commercial Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Realty Income Corporation 1 5 3 0 2.22
Gladstone Commercial Corporation 0 3 2 0 2.40

Realty Income Corporation currently has a consensus target price of $69.25, suggesting a potential upside of 22.48%. Gladstone Commercial Corporation has a consensus target price of $22.50, suggesting a potential downside of 0.44%. Given Realty Income Corporation’s higher possible upside, analysts plainly believe Realty Income Corporation is more favorable than Gladstone Commercial Corporation.

Valuation and Earnings

This table compares Realty Income Corporation and Gladstone Commercial Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Realty Income Corporation $1.10 billion 14.44 $315.57 million $1.22 46.34
Gladstone Commercial Corporation $86.37 million 7.25 $3.95 million ($0.04) -565.00

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

Risk & Volatility

Realty Income Corporation has a beta of 0.28, indicating that its stock price is 72% less volatile than the S&P 500. Comparatively, Gladstone Commercial Corporation has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500.

Summary

Realty Income Corporation beats Gladstone Commercial Corporation on 12 of the 17 factors compared between the two stocks.

Realty Income Corporation Company Profile

Realty Income Corporation is a real estate investment trust (REIT). The Company is engaged in in-house acquisition, portfolio management, asset management, credit research, real estate research, legal, finance and accounting, information technology and capital markets capabilities. As of December 31, 2016, the Company owned a diversified portfolio of 4,944 properties located in 49 states and Puerto Rico, with over 83.0 million square feet of leasable space leased to 248 different commercial tenants doing business in 47 separate industries. As of December 31, 2016, of the 4,944 properties in the portfolio, 4,920, or 99.5%, were single-tenant properties, and the remaining were multi-tenant properties. As of December 31, 2016, of the 4,920 single-tenant properties, 4,836 were leased with a weighted average remaining lease term (excluding rights to extend a lease at the option of the tenant) of approximately 9.8 years.

Gladstone Commercial Corporation Company Profile

Gladstone Commercial Corporation is a real estate investment trust. The Company focuses on acquiring, owning and managing primarily office and industrial properties. The Company also makes long-term industrial and commercial mortgage loans. As of February 15, 2017, the Company owned 95 properties totaling 10.9 million square feet in 24 states. As of December 31, 2016, the Company’s properties were located in various states of the United States, such as Ohio, Pennsylvania, North Carolina, Georgia, South Carolina, Michigan, Minnesota, Colorado and New Jersey. The Company’s properties have tenants from various industries, such as telecommunications; healthcare; automobile; electronics; information technology; chemicals, plastics and rubber; containers, packaging and glass; personal and non-durable consumer products; machinery; banking; childcare; buildings and real estate; beverage, food and tobacco; printing and publishing; education; home and office furnishings, and oil and gas.

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