Contrasting AGNC Investment (NASDAQ:AGNC) & Arbor Realty Trust (NYSE:ABR)

AGNC Investment (NASDAQ:AGNC) and Arbor Realty Trust (NYSE:ABR) are both mid-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, profitability, dividends, analyst recommendations, valuation, institutional ownership and risk.

Profitability

This table compares AGNC Investment and Arbor Realty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AGNC Investment	29.26%	21.92%	2.00%
Arbor Realty Trust	22.66%	14.75%	2.65%

Analyst Ratings

This is a summary of recent ratings and price targets for AGNC Investment and Arbor Realty Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AGNC Investment	0	3	7	0	2.70
Arbor Realty Trust	2	3	1	0	1.83

AGNC Investment currently has a consensus target price of $10.50, suggesting a potential upside of 0.77%. Arbor Realty Trust has a consensus target price of $13.75, suggesting a potential upside of 13.68%. Given Arbor Realty Trust’s higher possible upside, analysts clearly believe Arbor Realty Trust is more favorable than AGNC Investment.

Volatility & Risk

AGNC Investment has a beta of 1.48, suggesting that its share price is 48% more volatile than the S&P 500. Comparatively, Arbor Realty Trust has a beta of 2.03, suggesting that its share price is 103% more volatile than the S&P 500.

Dividends

AGNC Investment pays an annual dividend of $1.44 per share and has a dividend yield of 13.8%. Arbor Realty Trust pays an annual dividend of $1.72 per share and has a dividend yield of 14.2%. AGNC Investment pays out 148.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Arbor Realty Trust pays out 144.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Arbor Realty Trust has increased its dividend for 13 consecutive years. Arbor Realty Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

38.3% of AGNC Investment shares are owned by institutional investors. Comparatively, 57.3% of Arbor Realty Trust shares are owned by institutional investors. 0.4% of AGNC Investment shares are owned by company insiders. Comparatively, 3.7% of Arbor Realty Trust shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares AGNC Investment and Arbor Realty Trust”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AGNC Investment	$973.00 million	9.48	$863.00 million	$0.97	10.74
Arbor Realty Trust	$625.94 million	3.66	$264.64 million	$1.19	10.16

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

Summary

Arbor Realty Trust beats AGNC Investment on 9 of the 17 factors compared between the two stocks.

About AGNC Investment

AGNC Investment Corp., formerly American Capital Agency Corp., is a real estate investment trust. The Company invests in agency residential mortgage-backed securities on a leveraged basis. Its investments consist of residential mortgage pass-through securities and collateralized mortgage obligations (CMOs) for which the principal and interest payments are guaranteed by a government-sponsored enterprise, such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), or by the United States Government agency, such as the Government National Mortgage Association (Ginnie Mae) (collectively, GSEs). Its agency securities include agency residential mortgage-backed securities (Agency RMBS) and to-be-announced forward contracts (TBAs). Its Non-Agency Securities include credit risk transfer securities (CRT), non-agency residential mortgage-backed securities (Non-Agency RMBS) and commercial mortgage-backed securities (CMBS).

About Arbor Realty Trust

Arbor Realty Trust, Inc. invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States. The company operates through Structured Business and Agency Business segments. It primarily invests in bridge and mezzanine loans, including junior participating interests in first mortgages, and preferred and direct equity, as well as real estate-related joint ventures, real estate-related notes, and various mortgage-related securities. In addition, the company offers bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property; financing by making preferred equity investments in entities that directly or indirectly own real property; mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction; junior participation financing in the form of a junior participating interest in the senior debt; and financing products to borrowers who are looking to acquire conventional, workforce, and affordable single-family housing. Further, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Arbor Realty Trust, Inc. was incorporated in 2003 and is headquartered in Uniondale, New York.