Analyzing DiamondRock Hospitality (NYSE:DRH) & W.P. Carey (NYSE:WPC)

W.P. Carey (NYSE:WPC) and DiamondRock Hospitality (NYSE:DRH) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitability, analyst recommendations, institutional ownership and risk.

Dividends

W.P. Carey pays an annual dividend of $3.64 per share and has a dividend yield of 5.6%. DiamondRock Hospitality pays an annual dividend of $0.32 per share and has a dividend yield of 3.5%. W.P. Carey pays out 220.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DiamondRock Hospitality pays out 128.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. W.P. Carey has raised its dividend for 2 consecutive years and DiamondRock Hospitality has raised its dividend for 1 consecutive years. W.P. Carey is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

73.7% of W.P. Carey shares are held by institutional investors. 0.9% of W.P. Carey shares are held by insiders. Comparatively, 1.4% of DiamondRock Hospitality shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares W.P. Carey and DiamondRock Hospitality”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
W.P. Carey	$1.58 billion	8.98	$460.84 million	$1.65	39.30
DiamondRock Hospitality	$1.13 billion	1.68	$48.05 million	$0.25	37.06

W.P. Carey has higher revenue and earnings than DiamondRock Hospitality. DiamondRock Hospitality is trading at a lower price-to-earnings ratio than W.P. Carey, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

W.P. Carey has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500. Comparatively, DiamondRock Hospitality has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for W.P. Carey and DiamondRock Hospitality, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
W.P. Carey	1	8	3	0	2.17
DiamondRock Hospitality	0	6	1	0	2.14

W.P. Carey presently has a consensus price target of $68.50, suggesting a potential upside of 5.64%. DiamondRock Hospitality has a consensus price target of $9.38, suggesting a potential upside of 1.19%. Given W.P. Carey’s stronger consensus rating and higher probable upside, equities analysts clearly believe W.P. Carey is more favorable than DiamondRock Hospitality.

Profitability

This table compares W.P. Carey and DiamondRock Hospitality’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
W.P. Carey	21.75%	4.40%	2.06%
DiamondRock Hospitality	5.69%	4.04%	2.05%

Summary

W.P. Carey beats DiamondRock Hospitality on 14 of the 17 factors compared between the two stocks.

About W.P. Carey

W. P. Carey ranks among the largest net lease REITs with a well-diversified portfolio of high-quality, operationally critical commercial real estate, which includes 1,424 net lease properties covering approximately 173 million square feet and a portfolio of 89 self-storage operating properties as of December 31, 2023. With offices in New York, London, Amsterdam and Dallas, the company remains focused on investing primarily in single-tenant, industrial, warehouse and retail properties located in the U.S. and Northern and Western Europe, under long-term net leases with built-in rent escalations.

About DiamondRock Hospitality

DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in leisure destinations and top gateway markets. The Company currently owns 36 premium quality hotels with over 9,700 rooms. The Company has strategically positioned its portfolio to be operated both under leading global brand families as well as independent boutique hotels in the lifestyle segment.