Contrasting Lument Finance Trust (NYSE:LFT) and Angel Oak Mortgage REIT (NYSE:AOMR)

Angel Oak Mortgage REIT (NYSE:AOMR) and Lument Finance Trust (NYSE:LFT) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, risk, dividends, valuation and earnings.

Profitability

This table compares Angel Oak Mortgage REIT and Lument Finance Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Angel Oak Mortgage REIT	11.85%	7.74%	0.71%
Lument Finance Trust	-2.59%	5.65%	0.86%

Earnings & Valuation

This table compares Angel Oak Mortgage REIT and Lument Finance Trust”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Angel Oak Mortgage REIT	$143.65 million	1.44	$44.02 million	$0.75	11.87
Lument Finance Trust	$79.00 million	0.46	-$2.74 million	($0.13)	-5.38

Angel Oak Mortgage REIT has higher revenue and earnings than Lument Finance Trust. Lument Finance Trust is trading at a lower price-to-earnings ratio than Angel Oak Mortgage REIT, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Angel Oak Mortgage REIT and Lument Finance Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Angel Oak Mortgage REIT	0	3	3	0	2.50
Lument Finance Trust	1	0	0	0	1.00

Angel Oak Mortgage REIT currently has a consensus target price of $10.06, indicating a potential upside of 13.06%. Given Angel Oak Mortgage REIT’s stronger consensus rating and higher probable upside, analysts plainly believe Angel Oak Mortgage REIT is more favorable than Lument Finance Trust.

Institutional and Insider Ownership

80.2% of Angel Oak Mortgage REIT shares are owned by institutional investors. Comparatively, 19.5% of Lument Finance Trust shares are owned by institutional investors. 2.9% of Angel Oak Mortgage REIT shares are owned by insiders. Comparatively, 3.3% of Lument Finance Trust shares are owned 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.

Dividends

Angel Oak Mortgage REIT pays an annual dividend of $1.28 per share and has a dividend yield of 14.4%. Lument Finance Trust pays an annual dividend of $0.16 per share and has a dividend yield of 22.9%. Angel Oak Mortgage REIT pays out 170.7% 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 pays out -123.1% of its earnings in the form of a dividend. Lument Finance Trust has increased its dividend for 2 consecutive years. Lument Finance Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Angel Oak Mortgage REIT has a beta of 1.25, indicating that its stock price is 25% more volatile than the S&P 500. Comparatively, Lument Finance Trust has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.

Summary

Angel Oak Mortgage REIT beats Lument Finance Trust on 12 of the 17 factors compared between the two stocks.

About Angel Oak Mortgage REIT

Angel Oak Mortgage REIT, Inc., a real estate finance company, focuses on acquiring and investing in first lien non- qualified mortgage loans and other mortgage-related assets in the United States mortgage market. It offers investment securities; residential mortgage loans; and commercial mortgage loans. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was incorporated in 2018 and is headquartered in Atlanta, Georgia.

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.