Critical Review: Realty Income (NYSE:O) & Equinix (NASDAQ:EQIX)

Realty Income (NYSE:O) and Equinix (NASDAQ:EQIX) are both large-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, dividends, risk, analyst recommendations and institutional ownership.

Profitability

This table compares Realty Income and Equinix’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Realty Income	17.74%	3.26%	1.32%
Equinix	11.32%	7.73%	2.95%

Earnings and Valuation

This table compares Realty Income and Equinix’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Realty Income	$4.08 billion	12.46	$872.31 million	$1.08	54.05
Equinix	$8.19 billion	8.91	$969.18 million	$9.97	77.11

Equinix has higher revenue and earnings than Realty Income. Realty Income is trading at a lower price-to-earnings ratio than Equinix, indicating that it is currently the more affordable of the two stocks.

Dividends

Realty Income pays an annual dividend of $3.16 per share and has a dividend yield of 5.4%. Equinix pays an annual dividend of $17.04 per share and has a dividend yield of 2.2%. Realty Income pays out 292.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Equinix pays out 170.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Realty Income has raised its dividend for 32 consecutive years. Realty Income is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Realty Income has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500. Comparatively, Equinix has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500.

Insider & Institutional Ownership

70.8% of Realty Income shares are owned by institutional investors. Comparatively, 94.9% of Equinix shares are owned by institutional investors. 0.1% of Realty Income shares are owned by company insiders. Comparatively, 0.3% of Equinix shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Realty Income and Equinix, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Realty Income	0	8	6	0	2.43
Equinix	0	5	11	1	2.76

Realty Income presently has a consensus target price of $61.88, suggesting a potential upside of 6.02%. Equinix has a consensus target price of $875.50, suggesting a potential upside of 13.88%. Given Equinix’s stronger consensus rating and higher possible upside, analysts clearly believe Equinix is more favorable than Realty Income.

Summary

Equinix beats Realty Income on 13 of the 18 factors compared between the two stocks.

About Realty Income

Realty Income, The Monthly Dividend Company, is an S&P 500 company and member of the S&P 500 Dividend Aristocrats index. We invest in people and places to deliver dependable monthly dividends that increase over time. The company is structured as a real estate investment trust ("REIT"), and its monthly dividends are supported by the cash flow from over 15,450 real estate properties (including properties acquired in the Spirit merger in January 2024) primarily owned under long-term net lease agreements with commercial clients. To date, the company has declared 644 consecutive monthly dividends on its shares of common stock throughout its 55-year operating history and increased the dividend 123 times since Realty Income's public listing in 1994 (NYSE: O).

About Equinix

Equinix (Nasdaq: EQIX) is the world's digital infrastructure company . Digital leaders harness Equinix's trusted platform to bring together and interconnect foundational infrastructure at software speed. Equinix enables organizations to access all the right places, partners and possibilities to scale with agility, speed the launch of digital services, deliver world-class experiences and multiply their value, while supporting their sustainability goals.