Reviewing Dynex Capital (NYSE:DX) and Seven Hills Realty Trust (NASDAQ:SEVN)

Seven Hills Realty Trust (NASDAQ:SEVN) and Dynex Capital (NYSE:DX) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, profitability, dividends and risk.

Dividends

Seven Hills Realty Trust pays an annual dividend of $1.40 per share and has a dividend yield of 23.1%. Dynex Capital pays an annual dividend of $2.04 per share and has a dividend yield of 18.5%. Seven Hills Realty Trust pays out 96.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Dynex Capital pays out 971.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Dynex Capital has increased its dividend for 5 consecutive years. Seven Hills Realty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

38.3% of Dynex Capital shares are held by institutional investors. 0.8% of Dynex Capital shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Seven Hills Realty Trust and Dynex Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Seven Hills Realty Trust	N/A	N/A	N/A
Dynex Capital	-4.65%	10.45%	1.23%

Valuation & Earnings

This table compares Seven Hills Realty Trust and Dynex Capital”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Seven Hills Realty Trust	$25.58 million	N/A	N/A	$1.46	4.16
Dynex Capital	$16.95 million	161.07	$319.07 million	$0.21	52.55

Dynex Capital has lower revenue, but higher earnings than Seven Hills Realty Trust. Seven Hills Realty Trust is trading at a lower price-to-earnings ratio than Dynex Capital, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations for Seven Hills Realty Trust and Dynex Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Seven Hills Realty Trust	0	1	5	0	2.83
Dynex Capital	1	1	3	0	2.40

Seven Hills Realty Trust currently has a consensus price target of $10.12, suggesting a potential upside of 66.80%. Dynex Capital has a consensus price target of $13.38, suggesting a potential upside of 21.21%. Given Seven Hills Realty Trust’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Seven Hills Realty Trust is more favorable than Dynex Capital.

Summary

Seven Hills Realty Trust beats Dynex Capital on 8 of the 14 factors compared between the two stocks.

About Seven Hills Realty Trust

Seven Hills Realty Trust, a real estate investment trust, focuses on originating and investing in first mortgage loans secured by middle market and transitional commercial real estate in the United States. The company has elected to be taxed as a real estate investment trust. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. The company was formerly known as RMR Mortgage Trust. Seven Hills Realty Trust was incorporated in 2008 and is headquartered in Newton, Massachusetts.

About Dynex Capital

Dynex Capital, Inc., a mortgage real estate investment trust, invests in mortgage-backed securities (MBS) on a leveraged basis in the United States. It invests in agency and non-agency MBS consisting of residential MBS, commercial MBS (CMBS), and CMBS interest-only securities. Agency MBS have a guaranty of principal payment by an agency of the U.S. government or a U.S. government-sponsored entity, such as Fannie Mae and Freddie Mac. Non-Agency MBS have no such guaranty of payment. The company has qualified as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders as dividends. Dynex Capital, Inc. was incorporated in 1987 and is headquartered in Glen Allen, Virginia.