Annaly Capital Management (NYSE:NLY) & TPG RE Finance Trust (NYSE:TRTX) Critical Survey

Annaly Capital Management (NYSE:NLY) and TPG RE Finance Trust (NYSE:TRTX) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, analyst recommendations, risk, earnings, profitability, institutional ownership and valuation.

Dividends

Annaly Capital Management pays an annual dividend of $3.00 per share and has a dividend yield of 15.8%. TPG RE Finance Trust pays an annual dividend of $0.96 per share and has a dividend yield of 13.1%. Annaly Capital Management pays out 209.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TPG RE Finance Trust pays out 246.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Annaly Capital Management has raised its dividend for 2 consecutive years. Annaly Capital Management is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

51.6% of Annaly Capital Management shares are owned by institutional investors. Comparatively, 57.1% of TPG RE Finance Trust shares are owned by institutional investors. 0.2% of Annaly Capital Management shares are owned by company insiders. Comparatively, 3.0% of TPG RE Finance Trust shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Annaly Capital Management and TPG RE Finance Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Annaly Capital Management	15.52%	16.65%	1.72%
TPG RE Finance Trust	13.13%	5.21%	1.17%

Earnings and Valuation

This table compares Annaly Capital Management and TPG RE Finance Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Annaly Capital Management	$1.36 billion	10.96	$2.03 billion	$1.43	13.27
TPG RE Finance Trust	$332.58 million	1.67	$60.32 million	$0.39	18.82

Annaly Capital Management has higher revenue and earnings than TPG RE Finance Trust. Annaly Capital Management is trading at a lower price-to-earnings ratio than TPG RE Finance Trust, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations for Annaly Capital Management and TPG RE Finance Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Annaly Capital Management	0	4	7	1	2.75
TPG RE Finance Trust	1	2	4	0	2.43

Annaly Capital Management currently has a consensus target price of $21.67, indicating a potential upside of 14.16%. TPG RE Finance Trust has a consensus target price of $9.33, indicating a potential upside of 27.17%. Given TPG RE Finance Trust’s higher possible upside, analysts clearly believe TPG RE Finance Trust is more favorable than Annaly Capital Management.

Volatility and Risk

Annaly Capital Management has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500. Comparatively, TPG RE Finance Trust has a beta of 1.48, meaning that its stock price is 48% more volatile than the S&P 500.

Summary

Annaly Capital Management beats TPG RE Finance Trust on 13 of the 18 factors compared between the two stocks.

About Annaly Capital Management

Annaly Capital Management, Inc., a diversified capital manager, engages in mortgage finance. The company invests in agency mortgage-backed securities collateralized by residential mortgages; non-agency residential whole loans and securitized products within the residential and commercial markets; mortgage servicing rights; agency commercial mortgage-backed securities; to-be-announced forward contracts; residential mortgage loans; and agency or private label credit risk transfer securities. It has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders. The company was incorporated in 1996 and is based in New York, New York.

About TPG RE Finance Trust

TPG RE Finance Trust, Inc., a commercial real estate finance company, originates, acquires, and manages commercial mortgage loans and other commercial real estate-related debt instruments in the United States. It invests in commercial mortgage loans; subordinate mortgage interests, mezzanine loans, secured real estate securities, note financing, preferred equity, and miscellaneous debt instruments; and commercial real estate collateralized loan obligations and commercial mortgage-backed securities secured by properties primarily in the multifamily, life science, mixed-use, hospitality, self storage, industrial, and retail real estate sectors. 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. TPG RE Finance Trust, Inc. was incorporated in 2014 and is based in New York, New York.