Dynex Capital (NYSE:DX) versus Invesco Mortgage Capital (NYSE:IVR) Head to Head Survey

Invesco Mortgage Capital (NYSE:IVR) and Dynex Capital (NYSE:DX) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, profitability, institutional ownership, dividends, earnings, analyst recommendations and valuation.

Profitability

This table compares Invesco Mortgage Capital and Dynex Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Invesco Mortgage Capital	-8.49%	26.75%	2.80%
Dynex Capital	-4.65%	10.30%	1.17%

Dividends

Invesco Mortgage Capital pays an annual dividend of $1.44 per share and has a dividend yield of 28.6%. Dynex Capital pays an annual dividend of $2.04 per share and has a dividend yield of 20.3%. Invesco Mortgage Capital pays out -800.0% of its earnings in the form of a dividend. Dynex Capital 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. Dynex Capital has increased its dividend for 5 consecutive years. Invesco Mortgage Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Invesco Mortgage Capital and Dynex Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Invesco Mortgage Capital	1	2	1	0	2.00
Dynex Capital	1	1	3	0	2.40

Invesco Mortgage Capital currently has a consensus price target of $8.38, suggesting a potential upside of 66.34%. Dynex Capital has a consensus price target of $13.38, suggesting a potential upside of 33.34%. Given Invesco Mortgage Capital’s higher possible upside, research analysts clearly believe Invesco Mortgage Capital is more favorable than Dynex Capital.

Earnings & Valuation

This table compares Invesco Mortgage Capital and Dynex Capital”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Invesco Mortgage Capital	$295.29 million	1.86	$101.28 million	($0.18)	-27.97
Dynex Capital	$533.52 million	4.88	$319.07 million	$0.21	47.77

Dynex Capital has higher revenue and earnings than Invesco Mortgage Capital. Invesco Mortgage Capital is trading at a lower price-to-earnings ratio than Dynex Capital, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Invesco Mortgage Capital has a beta of 1.73, meaning that its stock price is 73% more volatile than the S&P 500. Comparatively, Dynex Capital has a beta of 1.01, meaning that its stock price is 1% more volatile than the S&P 500.

Institutional and Insider Ownership

40.5% of Invesco Mortgage Capital shares are owned by institutional investors. Comparatively, 38.3% of Dynex Capital shares are owned by institutional investors. 0.2% of Invesco Mortgage Capital shares are owned by company insiders. Comparatively, 0.8% of Dynex Capital shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Dynex Capital beats Invesco Mortgage Capital on 10 of the 17 factors compared between the two stocks.

About Invesco Mortgage Capital

Invesco Mortgage Capital Inc. is a real estate investment trust that invests in mortgage-related assets, with a portfolio focused on residential and commercial mortgage-backed securities and mortgage loans. Its investments include securities backed by U.S. government agencies as well as non-agency securities. Founded in 2009, the company is externally managed by Invesco Advisers, Inc., an investment adviser affiliated with Invesco Ltd. Its activities are primarily focused on U.S. mortgage markets.

About Dynex Capital

Dynex Capital, Inc. is a mortgage real estate investment trust (REIT) that invests primarily in mortgage-backed securities issued or guaranteed by U.S. government agencies. Its portfolio includes securities backed by residential and commercial mortgages. The company manages its portfolio of mortgage assets and related financing with the goal of generating income for shareholders. Its investments are primarily tied to the U.S. mortgage market. Founded in 1987, Dynex Capital is based in Glen Allen, Virginia.