American Assets Trust (NYSE:AAT) and Agree Realty (NYSE:ADC) are both significant players in the finance sector, particularly in real estate investment. This article examines their investment potential by comparing their institutional ownership, profitability, earnings, dividends, risk, and analyst recommendations.
Ownership Structure and Institutional Confidence
Institutional ownership plays a crucial role in assessing a company’s stability and growth potential. Currently, 90.4% of American Assets Trust shares are held by institutional investors, while Agree Realty boasts an even higher figure at 97.8%. This strong institutional ownership suggests that large financial entities, including endowments and hedge funds, have confidence in both companies’ potential for long-term growth.
In terms of insider ownership, American Assets Trust has 36.8% of shares owned by insiders, indicating a significant level of management investment. In contrast, Agree Realty has a mere 1.8% of its shares owned by insiders, which may suggest a different approach to management equity involvement.
Risk and Volatility Assessment
Assessing volatility is vital for investors. American Assets Trust has a beta of 1.2, indicating that its share price is 20% more volatile than the S&P 500. Conversely, Agree Realty has a beta of 0.55, suggesting its share price is 45% less volatile than the S&P 500. This lower volatility may appeal to risk-averse investors looking for stability.
Both companies face risks related to their dividend payouts. American Assets Trust pays an annual dividend of $1.36 per share, translating to a yield of 7.0%. On the other hand, Agree Realty offers a higher annual dividend of $3.14 per share, resulting in a yield of 4.2%. Notably, American Assets Trust distributes 134.7% of its earnings as dividends, while Agree Realty pays out 183.6% of its earnings, raising concerns about the sustainability of these payouts.
Earnings, Valuation, and Profitability
When analyzing earnings and valuation, Agree Realty outperforms American Assets Trust in both revenue and earnings per share. Despite this, American Assets Trust is currently trading at a lower price-to-earnings ratio, which may indicate a more affordable investment option at this time.
In terms of profitability, comparing net margins, return on equity, and return on assets reveals a more favorable position for Agree Realty. The company has successfully increased its dividend for one consecutive year, while American Assets Trust has achieved this for four consecutive years, showcasing a stronger track record in dividend growth.
Overall, Agree Realty surpasses American Assets Trust in 11 out of 17 factors examined, highlighting its stronger investment profile in several key areas.
Company Profiles
American Assets Trust, Inc., headquartered in San Diego, California, operates as a vertically integrated and self-administered real estate investment trust (REIT). With over 55 years of experience, the company specializes in acquiring, developing, and managing office, retail, and residential properties across the United States, particularly in high-barrier markets in Southern California, Northern California, Washington, Oregon, Texas, and Hawaii. Its portfolio includes approximately 4.1 million rentable square feet of office space and 3.1 million rentable square feet of retail space.
Agree Realty Corporation is also a publicly traded REIT, focusing on properties leased to leading omni-channel retail tenants. As of December 31, 2023, the company owns and operates a portfolio of 2,135 properties across 49 states, covering around 44.2 million square feet of gross leasable area. The company’s stock is listed on the New York Stock Exchange under the symbol “ADC.”
In conclusion, investors looking at these two companies should consider their specific investment objectives, risk appetites, and the comparative strengths and weaknesses outlined in this analysis. Both American Assets Trust and Agree Realty present unique opportunities within the real estate investment trust sector.
