Head-To-Head Contrast: Annaly Capital Management (NYSE:NLY) & CubeSmart (NYSE:CUBE)

Annaly Capital Management (NYSE:NLY) and CubeSmart (NYSE:CUBE) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Dividends

Annaly Capital Management pays an annual dividend of $2.60 per share and has a dividend yield of 13.9%. CubeSmart pays an annual dividend of $2.08 per share and has a dividend yield of 5.0%. Annaly Capital Management pays out -3,714.3% of its earnings in the form of a dividend. CubeSmart pays out 117.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CubeSmart has increased its dividend for 15 consecutive years. Annaly Capital Management is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Annaly Capital Management and CubeSmart”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Annaly Capital Management	$320.33 million	32.64	-$1.64 billion	($0.07)	-266.43
CubeSmart	$1.06 billion	8.84	$410.76 million	$1.77	23.49

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

Analyst Recommendations

This is a summary of recent ratings and price targets for Annaly Capital Management and CubeSmart, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Annaly Capital Management	0	2	8	0	2.80
CubeSmart	1	7	3	0	2.18

Annaly Capital Management currently has a consensus target price of $21.22, suggesting a potential upside of 13.79%. CubeSmart has a consensus target price of $49.91, suggesting a potential upside of 20.03%. Given CubeSmart’s higher probable upside, analysts clearly believe CubeSmart is more favorable than Annaly Capital Management.

Insider & Institutional Ownership

51.6% of Annaly Capital Management shares are held by institutional investors. Comparatively, 97.6% of CubeSmart shares are held by institutional investors. 0.2% of Annaly Capital Management shares are held by insiders. Comparatively, 1.7% of CubeSmart shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk and Volatility

Annaly Capital Management has a beta of 1.51, indicating that its stock price is 51% more volatile than the S&P 500. Comparatively, CubeSmart has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500.

Profitability

This table compares Annaly Capital Management and CubeSmart’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Annaly Capital Management	2.59%	14.75%	1.57%
CubeSmart	37.79%	14.33%	6.48%

Summary

CubeSmart beats Annaly Capital Management on 10 of the 17 factors compared between the two stocks.

About Annaly Capital Management

Annaly Capital Management, Inc., a diversified capital manager, engages in mortgage finance. The company invests in agency mortgage-backed securities collateralized by residential mortgages; non-agency residential whole loans and securitized products within the residential and commercial markets; mortgage servicing rights; agency commercial mortgage-backed securities; to-be-announced forward contracts; residential mortgage loans; and agency or private label credit risk transfer securities. It has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders. The company was incorporated in 1996 and is based in New York, New York.

About CubeSmart

CubeSmart is a self-administered and self-managed real estate investment trust. The Company's self-storage properties are designed to offer affordable, easily accessible and, in most locations, climate-controlled storage space for residential and commercial customers. According to the 2023 Self-Storage Almanac, CubeSmart is one of the top three owners and operators of self-storage properties in the United States.