Equity Residential (NYSE:EQR) & Safehold (NYSE:SAFE) Critical Comparison

Safehold (NYSE:SAFE) and Equity Residential (NYSE:EQR) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, institutional ownership, analyst recommendations, risk, valuation, dividends and profitability.

Profitability

This table compares Safehold and Equity Residential’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Safehold	29.69%	4.92%	1.67%
Equity Residential	36.20%	9.98%	5.37%

Institutional and Insider Ownership

70.4% of Safehold shares are owned by institutional investors. Comparatively, 92.7% of Equity Residential shares are owned by institutional investors. 3.5% of Safehold shares are owned by insiders. Comparatively, 1.1% of Equity Residential shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

Safehold has a beta of 1.86, meaning that its share price is 86% more volatile than the S&P 500. Comparatively, Equity Residential has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500.

Dividends

Safehold pays an annual dividend of $0.71 per share and has a dividend yield of 4.5%. Equity Residential pays an annual dividend of $2.77 per share and has a dividend yield of 4.3%. Safehold pays out 44.4% of its earnings in the form of a dividend. Equity Residential pays out 94.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Safehold has raised its dividend for 1 consecutive years and Equity Residential has raised its dividend for 4 consecutive years. Safehold is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Safehold and Equity Residential”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Safehold	$385.55 million	2.91	$105.76 million	$1.60	9.79
Equity Residential	$3.09 billion	7.85	$1.12 billion	$2.93	21.78

Equity Residential has higher revenue and earnings than Safehold. Safehold is trading at a lower price-to-earnings ratio than Equity Residential, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings for Safehold and Equity Residential, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Safehold	1	6	4	1	2.42
Equity Residential	0	13	7	0	2.35

Safehold presently has a consensus price target of $19.00, suggesting a potential upside of 21.33%. Equity Residential has a consensus price target of $69.68, suggesting a potential upside of 9.20%. Given Safehold’s stronger consensus rating and higher possible upside, analysts clearly believe Safehold is more favorable than Equity Residential.

Summary

Equity Residential beats Safehold on 11 of the 18 factors compared between the two stocks.

About Safehold

Safehold Inc. (NYSE: SAFE) is revolutionizing real estate ownership by providing a new and better way for owners to unlock the value of the land beneath their buildings. Having created the modern ground lease industry in 2017, Safehold continues to help owners of high quality multifamily, office, industrial, hospitality, student housing, life science and mixed-use properties generate higher returns with less risk. The Company, which is taxed as a real estate investment trust (REIT), seeks to deliver safe, growing income and long-term capital appreciation to its shareholders.

About Equity Residential

Equity Residential is committed to creating communities where people thrive. The Company, a member of the S&P 500, is focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract affluent long-term renters. Equity Residential owns or has investments in 305 properties consisting of 80,683 apartment units, with an established presence in Boston, New York, Washington, D.C., Seattle, San Francisco and Southern California, and an expanding presence in Denver, Atlanta, Dallas/Ft. Worth and Austin.