Gladstone Commercial (NASDAQ:GOOD – Get Free Report) and Innovative Industrial Properties (NYSE:IIPR – Get Free Report) are both small-cap real estate companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, dividends, valuation and analyst recommendations.
Dividends
Gladstone Commercial pays an annual dividend of $1.20 per share and has a dividend yield of 9.4%. Innovative Industrial Properties pays an annual dividend of $7.60 per share and has a dividend yield of 13.5%. Gladstone Commercial pays out 461.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Innovative Industrial Properties pays out 172.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Innovative Industrial Properties has increased its dividend for 4 consecutive years. Innovative Industrial Properties is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Gladstone Commercial has a beta of 1.08, suggesting that its share price is 8% more volatile than the S&P 500. Comparatively, Innovative Industrial Properties has a beta of 1.35, suggesting that its share price is 35% more volatile than the S&P 500.
Analyst Ratings
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Gladstone Commercial | 0 | 4 | 0 | 0 | 2.00 |
| Innovative Industrial Properties | 1 | 3 | 0 | 0 | 1.75 |
Gladstone Commercial presently has a consensus price target of $12.83, indicating a potential upside of 0.34%. Innovative Industrial Properties has a consensus price target of $48.00, indicating a potential downside of 14.72%. Given Gladstone Commercial’s stronger consensus rating and higher probable upside, research analysts plainly believe Gladstone Commercial is more favorable than Innovative Industrial Properties.
Institutional & Insider Ownership
45.5% of Gladstone Commercial shares are owned by institutional investors. Comparatively, 70.6% of Innovative Industrial Properties shares are owned by institutional investors. 1.3% of Gladstone Commercial shares are owned by company insiders. Comparatively, 2.3% of Innovative Industrial Properties shares are owned 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.
Valuation & Earnings
This table compares Gladstone Commercial and Innovative Industrial Properties”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Gladstone Commercial | $161.34 million | 3.84 | $19.29 million | $0.26 | 49.19 |
| Innovative Industrial Properties | $265.95 million | 5.83 | $118.25 million | $4.41 | 12.76 |
Innovative Industrial Properties has higher revenue and earnings than Gladstone Commercial. Innovative Industrial Properties is trading at a lower price-to-earnings ratio than Gladstone Commercial, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Gladstone Commercial and Innovative Industrial Properties’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Gladstone Commercial | 14.55% | 14.61% | 1.99% |
| Innovative Industrial Properties | 52.27% | 7.73% | 5.69% |
Summary
Innovative Industrial Properties beats Gladstone Commercial on 12 of the 16 factors compared between the two stocks.
About Gladstone Commercial
Gladstone Commercial Corporation is a real estate investment trust focused on acquiring, owning, and operating net leased industrial and office properties across the United States. Including payments through January 2024, Gladstone Commercial has paid 229 consecutive monthly cash distributions on its common stock. Prior to paying distributions on a monthly basis, Gladstone Commercial paid five consecutive quarterly cash distributions. Gladstone Commercial has never skipped or deferred a distribution since its inception in 2003.
About Innovative Industrial Properties
Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017.
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