In a recent financial comparison between two real estate investment trusts, Digital Realty Trust (NYSE: DLR) and CubeSmart (NYSE: CUBE), key metrics highlight the strengths and weaknesses of each company. Analysts evaluated factors such as institutional ownership, risk, profitability, earnings, and dividends to determine which company may be the better investment.
Ownership and Institutional Support
Institutional investors show strong confidence in both companies. Approximately 99.7% of Digital Realty Trust shares are owned by institutional investors, compared to 97.6% for CubeSmart. Insider ownership is markedly lower for Digital Realty Trust, with only 0.1% of shares held by insiders, while CubeSmart has 1.7% insider ownership. High institutional ownership often indicates belief in a company’s long-term market performance.
Risk and Volatility
In terms of risk, both companies share a similar profile. CubeSmart has a beta of 1.11, suggesting its share price is 11% more volatile than the S&P 500. Notably, Digital Realty Trust also has a beta of 1.11, reflecting the same level of volatility. Investors might consider this information when evaluating potential risks associated with each stock.
Profitability and Dividends
When it comes to dividends, CubeSmart offers an annual dividend of $2.08 per share, yielding 5.7%. In comparison, Digital Realty Trust pays an annual dividend of $4.88, with a yield of 3.2%. Notably, CubeSmart has a high payout ratio, distributing 133.3% of its earnings as dividends, indicating potential sustainability concerns. Digital Realty Trust follows closely with a payout ratio of 126.1%.
CubeSmart boasts an impressive track record, having increased its dividend for 16 consecutive years. This consistent growth makes it a more attractive option for dividend-seeking investors despite its higher payout ratio.
Analyst Ratings and Price Targets
Analysts have differing views on the future performance of these two stocks. According to MarketBeat, CubeSmart has a consensus price target of $45.63, indicating a potential upside of 25.03%. Conversely, Digital Realty Trust has a higher consensus price target of $199.05, suggesting a potential upside of 29.60%. These ratings reflect a general belief among analysts that Digital Realty Trust may be a more favorable investment option.
Earnings and Valuation Metrics
Comparing earnings and valuation, Digital Realty Trust outperforms CubeSmart in terms of revenue and earnings. However, CubeSmart trades at a lower price-to-earnings ratio, indicating it might be the more affordable option among the two. This contrast in valuation metrics could influence investor decisions based on their financial strategies.
Company Profiles
CubeSmart is a self-administered and self-managed real estate investment trust focused on self-storage properties. According to the 2023 Self-Storage Almanac, it ranks among the top three owners and operators of self-storage facilities in the United States. The company’s properties are designed to provide affordable and easily accessible storage solutions for both residential and commercial customers.
Digital Realty Trust, founded on March 9, 2004, and headquartered in Dallas, TX, operates as a real estate investment trust specializing in data center solutions, colocation, and interconnection services. It serves a diverse range of industries, including artificial intelligence, cloud computing, and financial services.
In summary, while Digital Realty Trust excels across various metrics, CubeSmart presents a strong case as a dividend stock with its long history of growth. Investors will need to weigh these factors based on their individual investment goals and risk tolerance.
