Contrasting Simon Property Group (NYSE:SPG) and Federal Realty Investment Trust (NYSE:FRT)

Simon Property Group (NYSE:SPG) and Federal Realty Investment Trust (NYSE:FRT) are both real estate companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, earnings, analyst recommendations, profitability and valuation.

Volatility & Risk

Simon Property Group has a beta of 1.27, suggesting that its stock price is 27% more volatile than the S&P 500. Comparatively, Federal Realty Investment Trust has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500.

Valuation and Earnings

This table compares Simon Property Group and Federal Realty Investment Trust”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Simon Property Group	$7.15 billion	10.57	$4.63 billion	$13.86	16.87
Federal Realty Investment Trust	$1.28 billion	7.57	$411.08 million	$5.00	22.52

Simon Property Group has higher revenue and earnings than Federal Realty Investment Trust. Simon Property Group is trading at a lower price-to-earnings ratio than Federal Realty Investment Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Simon Property Group and Federal Realty Investment Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Simon Property Group	63.08%	78.14%	11.35%
Federal Realty Investment Trust	32.60%	13.76%	4.85%

Analyst Ratings

This is a summary of recent recommendations and price targets for Simon Property Group and Federal Realty Investment Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Simon Property Group	0	13	9	0	2.41
Federal Realty Investment Trust	0	6	9	1	2.69

Simon Property Group presently has a consensus price target of $228.67, indicating a potential downside of 2.18%. Federal Realty Investment Trust has a consensus price target of $124.31, indicating a potential upside of 10.39%. Given Federal Realty Investment Trust’s stronger consensus rating and higher possible upside, analysts clearly believe Federal Realty Investment Trust is more favorable than Simon Property Group.

Dividends

Simon Property Group pays an annual dividend of $9.20 per share and has a dividend yield of 3.9%. Federal Realty Investment Trust pays an annual dividend of $4.64 per share and has a dividend yield of 4.1%. Simon Property Group pays out 66.4% of its earnings in the form of a dividend. Federal Realty Investment Trust pays out 92.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Simon Property Group has raised its dividend for 4 consecutive years and Federal Realty Investment Trust has raised its dividend for 58 consecutive years. Federal Realty Investment Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

93.0% of Simon Property Group shares are held by institutional investors. Comparatively, 93.9% of Federal Realty Investment Trust shares are held by institutional investors. 8.7% of Simon Property Group shares are held by company insiders. Comparatively, 1.1% of Federal Realty Investment Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Simon Property Group beats Federal Realty Investment Trust on 10 of the 17 factors compared between the two stocks.

About Simon Property Group

Simon Property Group is a real estate investment trust that owns, develops and manages shopping, dining and entertainment destinations. Its portfolio includes regional malls, premium outlet centers and mixed-use properties, which combine retail with other uses such as restaurants and entertainment. The company’s properties are located primarily in the United States, with additional investments and operations in international markets, including Europe and Asia. Its business activities include leasing space to retailers and other tenants, operating properties and investing in redevelopment and expansion projects.

About Federal Realty Investment Trust

Federal Realty Investment Trust is a real estate investment trust that owns, operates, and redevelops retail and mixed-use properties. Its portfolio includes shopping centers and destination-style properties that combine retail, restaurants, entertainment, and, in some locations, residential and office space. The company focuses on established, densely populated communities, primarily in the Northeast, Mid-Atlantic, California, and South Florida. Its properties serve shoppers, residents, and businesses through a mix of national and local retailers, dining options, and other services.