Highwoods Properties (NYSE:HIW) & Starwood Property Trust (NYSE:STWD) Head to Head Contrast

Highwoods Properties (NYSE:HIW) and Starwood Property Trust (NYSE:STWD) are both mid-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, profitability, risk, earnings, institutional ownership, analyst recommendations and dividends.

Insider and Institutional Ownership

96.3% of Highwoods Properties shares are owned by institutional investors. Comparatively, 49.8% of Starwood Property Trust shares are owned by institutional investors. 1.6% of Highwoods Properties shares are owned by company insiders. Comparatively, 5.4% of Starwood Property Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Highwoods Properties and Starwood Property Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Highwoods Properties	$825.86 million	3.79	$102.25 million	$0.95	30.63
Starwood Property Trust	$1.06 billion	6.55	$339.21 million	$1.17	17.54

Starwood Property Trust has higher revenue and earnings than Highwoods Properties. Starwood Property Trust is trading at a lower price-to-earnings ratio than Highwoods Properties, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Highwoods Properties and Starwood Property Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Highwoods Properties	12.37%	4.33%	1.70%
Starwood Property Trust	18.82%	9.93%	1.00%

Dividends

Highwoods Properties pays an annual dividend of $2.00 per share and has a dividend yield of 6.9%. Starwood Property Trust pays an annual dividend of $1.92 per share and has a dividend yield of 9.4%. Highwoods Properties pays out 210.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Starwood Property Trust pays out 164.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Starwood Property Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Highwoods Properties has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500. Comparatively, Starwood Property Trust has a beta of 1.69, meaning that its stock price is 69% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Highwoods Properties and Starwood Property Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Highwoods Properties	1	5	1	0	2.00
Starwood Property Trust	0	3	5	1	2.78

Highwoods Properties presently has a consensus price target of $30.71, indicating a potential upside of 5.57%. Starwood Property Trust has a consensus price target of $22.13, indicating a potential upside of 7.81%. Given Starwood Property Trust’s stronger consensus rating and higher possible upside, analysts clearly believe Starwood Property Trust is more favorable than Highwoods Properties.

Summary

Starwood Property Trust beats Highwoods Properties on 14 of the 17 factors compared between the two stocks.

About Highwoods Properties

Highwoods Properties, Inc., headquartered in Raleigh, is a publicly-traded (NYSE:HIW), fully-integrated office real estate investment trust (REIT) that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. Highwoods is in the work-placemaking business. We believe that by creating environments and experiences where the best and brightest can achieve together what they cannot apart, we can deliver greater value to our customers, their teammates and, in turn, our stakeholders.

About Starwood Property Trust

Starwood Property Trust, Inc. operates as a real estate investment trust (REIT) in the United States and internationally. The company operates through Commercial and Residential Lending, Infrastructure Lending, Property, and Investing and Servicing segments. The Commercial and Residential Lending segment originates, acquires, finances, and manages commercial first mortgages, non-agency residential mortgages, subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (CMBS), and residential mortgage-backed securities, as well as other real estate and real estate-related debt investments, include distressed or non-performing loans. The Infrastructure lending segment originates, acquires, finances, and manages infrastructure debt investments. The Property segment engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties, such as multifamily properties and commercial properties subject to net leases, that are held for investment. The Investing and Servicing segment manages and works out problem assets; acquires and manages unrated, investment grade, and non-investment grade rated CMBS comprising subordinated interests of securitization and re-securitization transactions; originates conduit loans for the primary purpose of selling these loans into securitization transactions; and acquires commercial real estate assets that include properties acquired from CMBS trusts. The company qualifies as a REIT for federal income tax purposes and 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 2009 and is headquartered in Greenwich, Connecticut.