CareTrust REIT (NYSE:CTRE – Get Free Report) and Diversified Healthcare Trust (NASDAQ:DHC – Get Free Report) are both real estate companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, analyst recommendations, risk and valuation.
Insider and Institutional Ownership
87.8% of CareTrust REIT shares are owned by institutional investors. Comparatively, 76.0% of Diversified Healthcare Trust shares are owned by institutional investors. 0.7% of CareTrust REIT shares are owned by insiders. Comparatively, 10.2% of Diversified Healthcare Trust shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Risk and Volatility
CareTrust REIT has a beta of 0.77, meaning that its stock price is 23% less volatile than the S&P 500. Comparatively, Diversified Healthcare Trust has a beta of 2.34, meaning that its stock price is 134% more volatile than the S&P 500.
Dividends
CareTrust REIT pays an annual dividend of $1.56 per share and has a dividend yield of 4.1%. Diversified Healthcare Trust pays an annual dividend of $0.04 per share and has a dividend yield of 0.5%. CareTrust REIT pays out 98.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Diversified Healthcare Trust pays out -6.2% of its earnings in the form of a dividend. CareTrust REIT has raised its dividend for 3 consecutive years. CareTrust REIT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Ratings
This is a breakdown of current ratings and recommmendations for CareTrust REIT and Diversified Healthcare Trust, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| CareTrust REIT | 0 | 4 | 10 | 1 | 2.80 |
| Diversified Healthcare Trust | 1 | 2 | 2 | 2 | 2.71 |
CareTrust REIT presently has a consensus target price of $43.57, indicating a potential upside of 13.75%. Diversified Healthcare Trust has a consensus target price of $9.83, indicating a potential upside of 32.61%. Given Diversified Healthcare Trust’s higher possible upside, analysts plainly believe Diversified Healthcare Trust is more favorable than CareTrust REIT.
Profitability
This table compares CareTrust REIT and Diversified Healthcare Trust’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| CareTrust REIT | 59.18% | 8.08% | 6.06% |
| Diversified Healthcare Trust | -10.29% | -9.51% | -3.57% |
Earnings & Valuation
This table compares CareTrust REIT and Diversified Healthcare Trust”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| CareTrust REIT | $476.39 million | 20.72 | $320.54 million | $1.59 | 24.09 |
| Diversified Healthcare Trust | $1.48 billion | 1.22 | -$285.89 million | ($0.64) | -11.59 |
CareTrust REIT has higher earnings, but lower revenue than Diversified Healthcare Trust. Diversified Healthcare Trust is trading at a lower price-to-earnings ratio than CareTrust REIT, indicating that it is currently the more affordable of the two stocks.
Summary
CareTrust REIT beats Diversified Healthcare Trust on 12 of the 18 factors compared between the two stocks.
About CareTrust REIT
CareTrust REIT, Inc. is a real estate investment trust that owns and invests in healthcare-related properties, with a focus on skilled nursing facilities and senior housing. Its portfolio also includes assisted living and other properties that serve older adults and people requiring healthcare services. The company primarily works with healthcare operators through long-term property leases and other real estate investments. CareTrust’s properties are located across the United States, and the company has expanded its investments into the United Kingdom.
About Diversified Healthcare Trust
Diversified Healthcare Trust (NASDAQ: DHC) is a real estate investment trust focused on healthcare-related properties in the United States. Its portfolio includes senior living communities, medical office buildings and life science properties. The company’s senior living properties serve older adults through independent living, assisted living and other care services, generally operated by third-party providers. Its medical office and life science properties accommodate healthcare practitioners, researchers and related organizations.
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