Select Income REIT (NASDAQ:SIR) and Senior Housing Properties Trust (NASDAQ:SNH) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, profitability, valuation and risk.
Institutional and Insider Ownership
49.0% of Select Income REIT shares are held by institutional investors. Comparatively, 73.2% of Senior Housing Properties Trust shares are held by institutional investors. 2.1% of Select Income REIT shares are held by insiders. Comparatively, 1.4% of Senior Housing Properties Trust shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This table compares Select Income REIT and Senior Housing Properties Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Select Income REIT||16.59%||3.55%||1.62%|
|Senior Housing Properties Trust||41.79%||13.68%||6.27%|
Select Income REIT pays an annual dividend of $2.04 per share and has a dividend yield of 10.2%. Senior Housing Properties Trust pays an annual dividend of $1.56 per share and has a dividend yield of 9.4%. Select Income REIT pays out 73.4% of its earnings in the form of a dividend. Senior Housing Properties Trust pays out 98.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Select Income REIT has increased its dividend for 6 consecutive years. Select Income REIT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
Select Income REIT has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500. Comparatively, Senior Housing Properties Trust has a beta of 0.45, meaning that its share price is 55% less volatile than the S&P 500.
This is a breakdown of current ratings and target prices for Select Income REIT and Senior Housing Properties Trust, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Select Income REIT||0||3||3||0||2.50|
|Senior Housing Properties Trust||2||2||2||0||2.00|
Select Income REIT currently has a consensus target price of $23.30, indicating a potential upside of 16.33%. Senior Housing Properties Trust has a consensus target price of $18.60, indicating a potential upside of 12.52%. Given Select Income REIT’s stronger consensus rating and higher probable upside, research analysts plainly believe Select Income REIT is more favorable than Senior Housing Properties Trust.
Earnings & Valuation
This table compares Select Income REIT and Senior Housing Properties Trust’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Select Income REIT||$468.10 million||3.83||$66.90 million||$2.78||7.21|
|Senior Housing Properties Trust||$1.07 billion||3.65||$147.61 million||$1.58||10.46|
Senior Housing Properties Trust has higher revenue and earnings than Select Income REIT. Select Income REIT is trading at a lower price-to-earnings ratio than Senior Housing Properties Trust, indicating that it is currently the more affordable of the two stocks.
Select Income REIT beats Senior Housing Properties Trust on 10 of the 17 factors compared between the two stocks.
About Select Income REIT
SIR is a real estate investment trust, or REIT, that owns directly or indirectly through its subsidiaries, including its majority owned subsidiary, Industrial Logistics Properties Trust, or ILPT, properties that are primarily net leased to single tenants. As of June 30, 2018, our consolidated portfolio included 367 buildings, leasable land parcels and easements with approximately 45.7 million rentable square feet located in 36 states. SIR owned 100 of these buildings and leasable land parcels with approximately 16.9 million rentable square feet, which are primarily office buildings, and ILPT owned 267 of these buildings, leasable land parcels and easements with approximately 28.8 million rentable square feet, including 226 buildings, leasable land parcels and easements with approximately 16.8 million rentable square feet which are primarily leasable industrial and commercial lands located in Hawaii. ILPT was our wholly owned subsidiary until January 17, 2018, when it completed an initial public offering, or the ILPT IPO, of its common shares and became a publicly traded REIT. We remain ILPT's largest shareholder and, as of the date hereof, we own 45.0 million, or approximately 69.2%, of ILPT's outstanding common shares. We have been investment grade rated since 2014, and we are included in the Russell 2000 Index and the MSCI US REIT Index.
About Senior Housing Properties Trust
SNH is a real estate investment trust, or REIT, that owns medical office and life science properties, senior living communities and wellness centers throughout the United States. SNH is managed by the operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), or RMR Inc., an alternative asset management company that is headquartered in Newton, MA.
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