Critical Contrast: NETSTREIT (NYSE:NTST) and Highwoods Properties (NYSE:HIW)

NETSTREIT (NYSE:NTST) and Highwoods Properties (NYSE:HIW) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, earnings, valuation, institutional ownership, risk, profitability and analyst recommendations.

Profitability

This table compares NETSTREIT and Highwoods Properties’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NETSTREIT	4.57%	0.52%	0.35%
Highwoods Properties	15.78%	5.44%	2.18%

Risk and Volatility

NETSTREIT has a beta of 0.97, indicating that its share price is 3% less volatile than the S&P 500. Comparatively, Highwoods Properties has a beta of 1.23, indicating that its share price is 23% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for NETSTREIT and Highwoods Properties, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NETSTREIT	1	2	5	0	2.50
Highwoods Properties	1	5	2	0	2.13

NETSTREIT presently has a consensus price target of $18.11, suggesting a potential upside of 6.45%. Highwoods Properties has a consensus price target of $24.38, suggesting a potential downside of 5.85%. Given NETSTREIT’s stronger consensus rating and higher possible upside, equities research analysts clearly believe NETSTREIT is more favorable than Highwoods Properties.

Earnings and Valuation

This table compares NETSTREIT and Highwoods Properties’ revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NETSTREIT	$131.90 million	9.46	$6.84 million	$0.09	189.02
Highwoods Properties	$834.00 million	3.29	$148.71 million	$1.22	21.22

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

Dividends

NETSTREIT pays an annual dividend of $0.82 per share and has a dividend yield of 4.8%. Highwoods Properties pays an annual dividend of $2.00 per share and has a dividend yield of 7.7%. NETSTREIT pays out 911.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Highwoods Properties pays out 163.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NETSTREIT has increased its dividend for 1 consecutive years. Highwoods Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

96.3% of Highwoods Properties shares are held by institutional investors. 0.5% of NETSTREIT shares are held by company insiders. Comparatively, 1.8% of Highwoods Properties shares are held by company 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.

Summary

Highwoods Properties beats NETSTREIT on 11 of the 17 factors compared between the two stocks.

About NETSTREIT

NETSTREIT Corp. is an internally managed real estate investment trust (REIT) based in Dallas, Texas that specializes in acquiring single-tenant net lease retail properties nationwide. The growing portfolio consists of high-quality properties leased to e-commerce resistant tenants with healthy balance sheets. Led by a management team of seasoned commercial real estate executives, NETSTREIT's strategy is to create the highest quality net lease retail portfolio in the country with the goal of generating consistent cash flows and dividends for its investors.

About Highwoods Properties

Highwoods Properties, Inc., headquartered in Raleigh, is a publicly-traded (NYSE:HIW), fully-integrated office real estate investment trust (REIT) that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. Highwoods is in the work-placemaking business. We believe that by creating environments and experiences where the best and brightest can achieve together what they cannot apart, we can deliver greater value to our customers, their teammates and, in turn, our stakeholders.