Head-To-Head Analysis: Safehold (NYSE:SAFE) and City Office REIT (NYSE:CIO)

Safehold (NYSE:SAFE) and City Office REIT (NYSE:CIO) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, valuation, institutional ownership, profitability and analyst recommendations.

Profitability

This table compares Safehold and City Office REIT’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Safehold	32.08%	4.79%	1.66%
City Office REIT	-5.56%	-1.48%	-0.65%

Analyst Ratings

This is a summary of current ratings and target prices for Safehold and City Office REIT, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Safehold	0	4	4	0	2.50
City Office REIT	0	0	0	0	0.00

Safehold currently has a consensus price target of $26.88, suggesting a potential upside of 68.71%. Given Safehold’s stronger consensus rating and higher probable upside, equities analysts plainly believe Safehold is more favorable than City Office REIT.

Insider and Institutional Ownership

70.4% of Safehold shares are held by institutional investors. Comparatively, 67.5% of City Office REIT shares are held by institutional investors. 3.3% of Safehold shares are held by insiders. Comparatively, 3.9% of City Office REIT shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Safehold pays an annual dividend of $0.70 per share and has a dividend yield of 4.4%. City Office REIT pays an annual dividend of $0.40 per share and has a dividend yield of 8.0%. Safehold pays out 41.2% of its earnings in the form of a dividend. City Office REIT pays out -95.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. City Office REIT is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Safehold has a beta of 1.67, meaning that its stock price is 67% more volatile than the S&P 500. Comparatively, City Office REIT has a beta of 1.98, meaning that its stock price is 98% more volatile than the S&P 500.

Valuation & Earnings

This table compares Safehold and City Office REIT”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Safehold	$376.84 million	3.02	-$54.97 million	$1.70	9.37
City Office REIT	$173.53 million	1.16	-$2.68 million	($0.42)	-11.95

City Office REIT has lower revenue, but higher earnings than Safehold. City Office REIT is trading at a lower price-to-earnings ratio than Safehold, indicating that it is currently the more affordable of the two stocks.

Summary

Safehold beats City Office REIT on 11 of the 16 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 City Office REIT

City Office REIT is an internally-managed real estate company focused on acquiring, owning and operating high-quality office properties located predominantly in Sun Belt markets. City Office currently owns or has a controlling interest in 5.7 million square feet of office properties. The Company has elected to be taxed as a real estate investment trust for U.S. federal income tax purposes.