City Office REIT (NYSE:CIO) & MFA Financial (NYSE:MFA) Head to Head Analysis

City Office REIT (NYSE:CIO) and MFA Financial (NYSE:MFA) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, valuation, earnings, analyst recommendations and risk.

Dividends

City Office REIT pays an annual dividend of $0.40 per share and has a dividend yield of 8.0%. MFA Financial pays an annual dividend of $1.40 per share and has a dividend yield of 13.1%. City Office REIT pays out -142.9% of its earnings in the form of a dividend. MFA Financial pays out -1,750.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. MFA Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares City Office REIT and MFA Financial’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
City Office REIT	$177.63 million	1.14	-$2.68 million	($0.28)	-17.95
MFA Financial	$163.70 million	6.64	$80.16 million	($0.08)	-133.13

MFA Financial has lower revenue, but higher earnings than City Office REIT. MFA Financial is trading at a lower price-to-earnings ratio than City Office REIT, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares City Office REIT and MFA Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
City Office REIT	-2.24%	-0.60%	-0.26%
MFA Financial	4.70%	9.66%	1.76%

Volatility & Risk

City Office REIT has a beta of 1.94, suggesting that its share price is 94% more volatile than the S&P 500. Comparatively, MFA Financial has a beta of 2.15, suggesting that its share price is 115% more volatile than the S&P 500.

Institutional and Insider Ownership

67.5% of City Office REIT shares are owned by institutional investors. Comparatively, 65.3% of MFA Financial shares are owned by institutional investors. 3.9% of City Office REIT shares are owned by insiders. Comparatively, 0.7% of MFA Financial shares are owned by 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.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for City Office REIT and MFA Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
City Office REIT	0	1	0	0	2.00
MFA Financial	0	2	4	0	2.67

MFA Financial has a consensus target price of $12.00, indicating a potential upside of 12.68%. Given MFA Financial’s stronger consensus rating and higher possible upside, analysts clearly believe MFA Financial is more favorable than City Office REIT.

Summary

MFA Financial beats City Office REIT on 12 of the 16 factors compared between the two stocks.

About City Office REIT

City Office REIT is an internally-managed real estate company focused on acquiring, owning and operating high-quality office properties located predominantly in Sun Belt markets. City Office currently owns or has a controlling interest in 5.7 million square feet of office properties. The Company has elected to be taxed as a real estate investment trust for U.S. federal income tax purposes.

About MFA Financial

MFA Financial, Inc., together with its subsidiaries, operates as a real estate investment trust in the United States. It invests in residential mortgage securities, including non-agency mortgage-backed securities, agency MBS, and credit risk transfer securities; residential whole loans, including purchased performing loans, purchased credit deteriorated, and non-performing loans; and mortgage servicing rights related assets. The company was incorporated in 1997 and is based in New York, New York.