Contrasting Lument Finance Trust (NYSE:LFT) & Arbor Realty Trust (NYSE:ABR)

Arbor Realty Trust (NYSE:ABR) and Lument Finance Trust (NYSE:LFT) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, risk, analyst recommendations, earnings, valuation, profitability and institutional ownership.

Dividends

Arbor Realty Trust pays an annual dividend of $0.68 per share and has a dividend yield of 12.9%. Lument Finance Trust pays an annual dividend of $0.16 per share and has a dividend yield of 23.8%. Arbor Realty Trust pays out 971.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lument Finance Trust pays out -44.4% of its earnings in the form of a dividend. Lument Finance Trust has raised its dividend for 2 consecutive years. Lument Finance Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Arbor Realty Trust and Lument Finance Trust”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arbor Realty Trust	$940.01 million	1.04	$148.80 million	$0.07	75.16
Lument Finance Trust	$79.00 million	0.45	-$2.74 million	($0.36)	-1.87

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

Profitability

This table compares Arbor Realty Trust and Lument Finance Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arbor Realty Trust	6.24%	7.38%	1.22%
Lument Finance Trust	-18.00%	0.86%	0.12%

Analyst Ratings

This is a breakdown of current ratings and price targets for Arbor Realty Trust and Lument Finance Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arbor Realty Trust	4	1	1	0	1.50
Lument Finance Trust	1	0	0	0	1.00

Arbor Realty Trust currently has a consensus target price of $6.00, indicating a potential upside of 14.05%. Given Arbor Realty Trust’s stronger consensus rating and higher probable upside, research analysts plainly believe Arbor Realty Trust is more favorable than Lument Finance Trust.

Volatility & Risk

Arbor Realty Trust has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500. Comparatively, Lument Finance Trust has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.

Institutional and Insider Ownership

57.3% of Arbor Realty Trust shares are held by institutional investors. Comparatively, 19.5% of Lument Finance Trust shares are held by institutional investors. 4.2% of Arbor Realty Trust shares are held by company insiders. Comparatively, 3.3% of Lument Finance Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Arbor Realty Trust beats Lument Finance Trust on 14 of the 17 factors compared between the two stocks.

About Arbor Realty Trust

Arbor Realty Trust, Inc. invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States. The company operates through Structured Business and Agency Business segments. It primarily invests in bridge and mezzanine loans, including junior participating interests in first mortgages, and preferred and direct equity, as well as real estate-related joint ventures, real estate-related notes, and various mortgage-related securities. In addition, the company offers bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property; financing by making preferred equity investments in entities that directly or indirectly own real property; mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction; junior participation financing in the form of a junior participating interest in the senior debt; and financing products to borrowers who are looking to acquire conventional, workforce, and affordable single-family housing. Further, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Arbor Realty Trust, Inc. was incorporated in 2003 and is headquartered in Uniondale, New York.

About Lument Finance Trust

Lument Finance Trust, Inc., a real estate investment trust, focuses on investing in, financing, and managing a portfolio of commercial real estate (CRE) debt investments in the United States. The company primarily invests in transitional floating rate CRE mortgage loans on middle market multi-family assets; and other CRE -related investments, including mezzanine loans, preferred equity, commercial mortgage-backed securities, fixed rate loans, construction loans, and other CRE debt instruments. Lument Finance Trust, Inc. is qualified as a real estate investment trust (REIT) under the Internal Revenue Code of 1986. As a REIT, it would not be subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Hunt Companies Finance Trust, Inc. and changed its name to Lument Finance Trust, Inc. in December 2020. Lument Finance Trust, Inc. was incorporated in 2012 and is headquartered in New York, New York.