UMH Properties (NYSE:UMH) and Franklin BSP Realty Trust (NYSE:FBRT) Critical Analysis

UMH Properties (NYSE:UMH) and Franklin BSP Realty Trust (NYSE:FBRT) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, dividends, profitability, valuation, earnings, risk and institutional ownership.

Risk & Volatility

UMH Properties has a beta of 1.3, suggesting that its share price is 30% more volatile than the S&P 500. Comparatively, Franklin BSP Realty Trust has a beta of 1.41, suggesting that its share price is 41% more volatile than the S&P 500.

Profitability

This table compares UMH Properties and Franklin BSP Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
UMH Properties	11.81%	6.06%	1.92%
Franklin BSP Realty Trust	45.58%	8.92%	1.89%

Insider and Institutional Ownership

75.4% of UMH Properties shares are held by institutional investors. Comparatively, 59.9% of Franklin BSP Realty Trust shares are held by institutional investors. 8.6% of UMH Properties shares are held by insiders. Comparatively, 0.7% of Franklin BSP Realty Trust shares are held by 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.

Analyst Recommendations

This is a breakdown of current ratings and target prices for UMH Properties and Franklin BSP Realty Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
UMH Properties	0	2	3	0	2.60
Franklin BSP Realty Trust	0	0	3	1	3.25

UMH Properties currently has a consensus target price of $21.25, indicating a potential upside of 10.16%. Franklin BSP Realty Trust has a consensus target price of $15.38, indicating a potential upside of 19.36%. Given Franklin BSP Realty Trust’s stronger consensus rating and higher possible upside, analysts clearly believe Franklin BSP Realty Trust is more favorable than UMH Properties.

Earnings & Valuation

This table compares UMH Properties and Franklin BSP Realty Trust”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
UMH Properties	$220.93 million	6.89	$8.01 million	$0.13	148.40
Franklin BSP Realty Trust	$263.95 million	3.99	$145.21 million	$0.82	15.71

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

Dividends

UMH Properties pays an annual dividend of $0.86 per share and has a dividend yield of 4.5%. Franklin BSP Realty Trust pays an annual dividend of $1.42 per share and has a dividend yield of 11.0%. UMH Properties pays out 661.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Franklin BSP Realty Trust pays out 173.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Franklin BSP Realty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Franklin BSP Realty Trust beats UMH Properties on 11 of the 16 factors compared between the two stocks.

About UMH Properties

UMH Properties, Inc., which was organized in 1968, is a public equity REIT that owns and operates 135 manufactured home communities containing approximately 25,800 developed homesites. These communities are located in New Jersey, New York, Ohio, Pennsylvania, Tennessee, Indiana, Michigan, Maryland, Alabama, South Carolina and Georgia. UMH also has an ownership interest in and operates two communities in Florida, containing 363 sites, through its joint venture with Nuveen Real Estate

About Franklin BSP Realty Trust

Benefit Street Partners operates as a self-managed real estate investment trust (REIT). BSP earns income from investing in a leveraged portfolio of residential mortgage pass-through securities consisting almost exclusively of adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises, either Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac) (together, the government-sponsored enterprises (GSEs)), or by an agency of the federal government, Government National Mortgage Association (Ginnie Mae). BSP’s investment strategy focuses on managing a portfolio of residential mortgage investments consisting almost exclusively of ARM Agency Securities. As of December 31, 2012, the Company’s securities consisted of Agency Securities classified as available-for-sale and Residential mortgage securities classified as held-to-maturity.