Lument Finance Trust (NYSE:LFT – Get Free Report) and MFA Financial (NYSE:MFA – Get Free Report) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, profitability, institutional ownership, valuation and earnings.
Profitability
This table compares Lument Finance Trust and MFA Financial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Lument Finance Trust | -18.00% | 0.84% | 0.12% |
| MFA Financial | 19.38% | 7.58% | 1.05% |
Risk & Volatility
Lument Finance Trust has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500. Comparatively, MFA Financial has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500.
Institutional & Insider Ownership
Dividends
Lument Finance Trust pays an annual dividend of $0.16 per share and has a dividend yield of 24.4%. MFA Financial pays an annual dividend of $1.44 per share and has a dividend yield of 15.7%. Lument Finance Trust pays out -123.1% of its earnings in the form of a dividend. MFA Financial pays out 144.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lument Finance Trust has raised its dividend for 2 consecutive years and MFA Financial has raised its dividend for 1 consecutive years. Lument Finance Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares Lument Finance Trust and MFA Financial”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Lument Finance Trust | $79.00 million | 0.43 | -$2.74 million | ($0.13) | -5.04 |
| MFA Financial | $270.43 million | 3.42 | $176.78 million | $1.00 | 9.16 |
MFA Financial has higher revenue and earnings than Lument Finance Trust. Lument Finance Trust is trading at a lower price-to-earnings ratio than MFA Financial, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a breakdown of current ratings and target prices for Lument Finance Trust and MFA Financial, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Lument Finance Trust | 1 | 0 | 0 | 0 | 1.00 |
| MFA Financial | 0 | 3 | 4 | 0 | 2.57 |
MFA Financial has a consensus target price of $10.46, indicating a potential upside of 14.16%. Given MFA Financial’s stronger consensus rating and higher possible upside, analysts clearly believe MFA Financial is more favorable than Lument Finance Trust.
Summary
MFA Financial beats Lument Finance Trust on 13 of the 17 factors compared between the two stocks.
About Lument Finance Trust
Lument Finance Trust, Inc., a real estate investment trust, focuses on investing in, financing, and managing a portfolio of commercial real estate (CRE) debt investments in the United States. The company primarily invests in transitional floating rate CRE mortgage loans on middle market multi-family assets; and other CRE -related investments, including mezzanine loans, preferred equity, commercial mortgage-backed securities, fixed rate loans, construction loans, and other CRE debt instruments. Lument Finance Trust, Inc. is qualified as a real estate investment trust (REIT) under the Internal Revenue Code of 1986. As a REIT, it would not be subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Hunt Companies Finance Trust, Inc. and changed its name to Lument Finance Trust, Inc. in December 2020. Lument Finance Trust, Inc. was incorporated in 2012 and is headquartered in New York, New York.
About MFA Financial
MFA Financial, Inc., together with its subsidiaries, operates as a real estate investment trust in the United States. It invests in residential mortgage securities, including non-agency mortgage-backed securities, agency MBS, and credit risk transfer securities; residential whole loans, including purchased performing loans, purchased credit deteriorated, and non-performing loans; and mortgage servicing rights related assets. The company was incorporated in 1997 and is based in New York, New York.
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