Comparing Annaly Capital Management (NYSE:NLY) and Public Storage (NYSE:PSA)

Public Storage (NYSE:PSA) and Annaly Capital Management (NYSE:NLY) are both large-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, analyst recommendations, institutional ownership, dividends, valuation and profitability.

Analyst Recommendations

This is a summary of current recommendations for Public Storage and Annaly Capital Management, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Public Storage	0	5	7	1	2.69
Annaly Capital Management	0	2	9	0	2.82

Public Storage presently has a consensus price target of $337.42, indicating a potential upside of 9.17%. Annaly Capital Management has a consensus price target of $21.10, indicating a potential upside of 6.11%. Given Public Storage’s higher probable upside, analysts clearly believe Public Storage is more favorable than Annaly Capital Management.

Profitability

This table compares Public Storage and Annaly Capital Management’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Public Storage	40.54%	34.07%	9.60%
Annaly Capital Management	20.70%	14.95%	1.60%

Insider and Institutional Ownership

78.8% of Public Storage shares are held by institutional investors. Comparatively, 51.6% of Annaly Capital Management shares are held by institutional investors. 11.1% of Public Storage shares are held by insiders. Comparatively, 0.2% of Annaly Capital Management shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Public Storage pays an annual dividend of $12.00 per share and has a dividend yield of 3.9%. Annaly Capital Management pays an annual dividend of $2.80 per share and has a dividend yield of 14.1%. Public Storage pays out 119.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Annaly Capital Management pays out 314.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Annaly Capital Management has raised its dividend for 2 consecutive years. Annaly Capital Management is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Public Storage and Annaly Capital Management”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Public Storage	$4.72 billion	11.48	$2.15 billion	$10.07	30.69
Annaly Capital Management	$898.19 million	13.23	$1.00 billion	$0.89	22.34

Public Storage has higher revenue and earnings than Annaly Capital Management. Annaly Capital Management is trading at a lower price-to-earnings ratio than Public Storage, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Public Storage has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500. Comparatively, Annaly Capital Management has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500.

Summary

Public Storage beats Annaly Capital Management on 12 of the 18 factors compared between the two stocks.

About Public Storage

Public Storage, a member of the S&P 500 and FT Global 500, is a REIT that primarily acquires, develops, owns, and operates self-storage facilities. At December 31, 2023, we had: (i) interests in 3,044 self-storage facilities located in 40 states with approximately 218 million net rentable square feet in the United States and (ii) a 35% common equity interest in Shurgard Self Storage Limited (Euronext Brussels: SHUR), which owned 275 self-storage facilities located in seven Western European nations with approximately 15 million net rentable square feet operated under the Shurgard brand. Our headquarters are located in Glendale, California.

About Annaly Capital Management

Annaly Capital Management, Inc., a diversified capital manager, engages in mortgage finance. The company invests in agency mortgage-backed securities collateralized by residential mortgages; non-agency residential whole loans and securitized products within the residential and commercial markets; mortgage servicing rights; agency commercial mortgage-backed securities; to-be-announced forward contracts; residential mortgage loans; and agency or private label credit risk transfer securities. It has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders. The company was incorporated in 1996 and is based in New York, New York.