Realty Income (NYSE:O) vs. Tanger (NYSE:SKT) Critical Review

Realty Income (NYSE:O) and Tanger (NYSE:SKT) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, risk, analyst recommendations and valuation.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Realty Income	18.41%	2.68%	1.48%
Tanger	19.70%	16.43%	4.48%

Dividends

Realty Income pays an annual dividend of $3.24 per share and has a dividend yield of 4.8%. Tanger pays an annual dividend of $1.17 per share and has a dividend yield of 3.2%. Realty Income pays out 276.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tanger pays out 117.0% 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 increased its dividend for 1 consecutive years and Tanger has increased its dividend for 4 consecutive years.

Institutional and Insider Ownership

70.8% of Realty Income shares are held by institutional investors. Comparatively, 85.2% of Tanger shares are held by institutional investors. 0.1% of Realty Income shares are held by company insiders. Comparatively, 5.7% of Tanger shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and target prices for Realty Income and Tanger, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Realty Income	1	8	6	0	2.33
Tanger	0	4	3	1	2.63

Realty Income currently has a consensus target price of $64.88, suggesting a potential downside of 3.31%. Tanger has a consensus target price of $36.29, suggesting a potential downside of 2.15%. Given Tanger’s stronger consensus rating and higher probable upside, analysts clearly believe Tanger is more favorable than Realty Income.

Volatility and Risk

Realty Income has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500. Comparatively, Tanger has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500.

Valuation and Earnings

This table compares Realty Income and Tanger”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Realty Income	$5.75 billion	10.88	$860.77 million	$1.17	57.36
Tanger	$581.56 million	7.34	$98.60 million	$1.00	37.08

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

Summary

Tanger beats Realty Income on 11 of the 18 factors compared between the two stocks.

About Realty Income

Realty Income, The Monthly Dividend Company, is an S&P 500 company and member of the S&P 500 Dividend Aristocrats index. We invest in people and places to deliver dependable monthly dividends that increase over time. The company is structured as a real estate investment trust (“REIT”), and its monthly dividends are supported by the cash flow from over 15,450 real estate properties (including properties acquired in the Spirit merger in January 2024) primarily owned under long-term net lease agreements with commercial clients. To date, the company has declared 644 consecutive monthly dividends on its shares of common stock throughout its 55-year operating history and increased the dividend 123 times since Realty Income’s public listing in 1994 (NYSE: O).

About Tanger

Tanger Inc. (NYSE: SKT) is a leading owner and operator of outlet and open-air retail shopping destinations, with over 43 years of expertise in the retail and outlet shopping industries. Tanger’s portfolio of 38 outlet centers, one adjacent managed center and one open-air lifestyle center comprises over 15 million square feet well positioned across tourist destinations and vibrant markets in 20 U.S. states and Canada. A publicly traded REIT since 1993, Tanger continues to innovate the retail experience for its shoppers with over 3,000 stores operated by more than 700 different brand name companies. Tanger is furnishing a Form 8-K with the Securities and Exchange Commission (“SEC”) that includes a supplemental information package for the quarter and year ended December 31, 2023.