American Homes 4 Rent (NYSE:AMH – Get Free Report) and Safehold (NYSE:SAFE – Get Free Report) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, analyst recommendations, profitability, earnings and valuation.
Dividends
American Homes 4 Rent pays an annual dividend of $1.20 per share and has a dividend yield of 3.3%. Safehold pays an annual dividend of $0.71 per share and has a dividend yield of 4.6%. American Homes 4 Rent pays out 111.1% 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 pays out 48.6% of its earnings in the form of a dividend. American Homes 4 Rent has increased its dividend for 5 consecutive years and Safehold has increased its dividend for 1 consecutive years. Safehold is clearly the better dividend stock, given its higher yield and lower payout ratio.
Profitability
This table compares American Homes 4 Rent and Safehold’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| American Homes 4 Rent | 23.41% | 5.45% | 3.21% |
| Safehold | 28.20% | 4.76% | 1.64% |
Risk and Volatility
Analyst Recommendations
This is a summary of recent ratings and recommmendations for American Homes 4 Rent and Safehold, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| American Homes 4 Rent | 0 | 7 | 8 | 0 | 2.53 |
| Safehold | 0 | 4 | 4 | 0 | 2.50 |
American Homes 4 Rent currently has a consensus target price of $40.90, suggesting a potential upside of 12.25%. Safehold has a consensus target price of $23.13, suggesting a potential upside of 50.43%. Given Safehold’s higher possible upside, analysts plainly believe Safehold is more favorable than American Homes 4 Rent.
Earnings & Valuation
This table compares American Homes 4 Rent and Safehold”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| American Homes 4 Rent | $1.73 billion | 7.80 | $412.43 million | $1.08 | 33.74 |
| Safehold | $365.68 million | 3.02 | $105.76 million | $1.46 | 10.53 |
American Homes 4 Rent has higher revenue and earnings than Safehold. Safehold is trading at a lower price-to-earnings ratio than American Homes 4 Rent, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
91.9% of American Homes 4 Rent shares are held by institutional investors. Comparatively, 70.4% of Safehold shares are held by institutional investors. 6.3% of American Homes 4 Rent shares are held by company insiders. Comparatively, 3.5% of Safehold shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Summary
American Homes 4 Rent beats Safehold on 11 of the 17 factors compared between the two stocks.
About American Homes 4 Rent
American Homes 4 Rent operates as a real estate investment trust. It engages in the acquisition, renovation, leasing, and operating of single-family homes as rental properties. The company was founded by Bradley Wayne Hughes, Sr. on October 19, 2012 and is headquartered in Las Vegas, NV.
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.
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