Analyzing Digital Realty Trust (NYSE:DLR) & CareTrust REIT (NYSE:CTRE)

Digital Realty Trust (NYSE:DLR) and CareTrust REIT (NYSE:CTRE) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, valuation, earnings, profitability, dividends, analyst recommendations and institutional ownership.

Dividends

Digital Realty Trust pays an annual dividend of $4.88 per share and has a dividend yield of 2.5%. CareTrust REIT pays an annual dividend of $1.34 per share and has a dividend yield of 3.2%. Digital Realty Trust pays out 128.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CareTrust REIT pays out 85.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CareTrust REIT has raised its dividend for 3 consecutive years. CareTrust REIT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for Digital Realty Trust and CareTrust REIT, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Digital Realty Trust	0	8	20	2	2.80
CareTrust REIT	1	1	8	3	3.00

Digital Realty Trust currently has a consensus price target of $213.86, indicating a potential upside of 9.51%. CareTrust REIT has a consensus price target of $42.82, indicating a potential upside of 1.77%. Given Digital Realty Trust’s higher possible upside, research analysts plainly believe Digital Realty Trust is more favorable than CareTrust REIT.

Risk and Volatility

Digital Realty Trust has a beta of 1.06, meaning that its stock price is 6% more volatile than the S&P 500. Comparatively, CareTrust REIT has a beta of 0.77, meaning that its stock price is 23% less volatile than the S&P 500.

Insider and Institutional Ownership

99.7% of Digital Realty Trust shares are held by institutional investors. Comparatively, 87.8% of CareTrust REIT shares are held by institutional investors. 0.2% of Digital Realty Trust shares are held by company insiders. Comparatively, 0.7% of CareTrust REIT shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Digital Realty Trust and CareTrust REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Digital Realty Trust	21.73%	6.05%	2.82%
CareTrust REIT	64.10%	8.65%	6.66%

Earnings & Valuation

This table compares Digital Realty Trust and CareTrust REIT”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Digital Realty Trust	$6.11 billion	11.23	$1.31 billion	$3.79	51.53
CareTrust REIT	$476.39 million	20.86	$320.54 million	$1.56	26.97

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

Summary

CareTrust REIT beats Digital Realty Trust on 10 of the 18 factors compared between the two stocks.

About Digital Realty Trust

Digital Realty Trust, Inc. operates as a real estate investment trust, which engages in the provision of data center, colocation and interconnection solutions. It serves the following industries: artificial intelligence (AI), networks, cloud, digital media, mobile, financial services, healthcare, and gaming. The company was founded on March 9, 2004, and is headquartered in Dallas, TX.

About CareTrust REIT

CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition, development and leasing of skilled nursing, seniors housing and other healthcare-related properties. With a nationwide portfolio of long-term net-leased properties, and a growing portfolio of quality operators leasing them, CareTrust REIT is pursuing both external and organic growth opportunities across the United States.