Comparing Highwoods Properties (HIW) and SL Green Realty Corporation (SLG)

Highwoods Properties (NYSE: HIW) and SL Green Realty Corporation (NYSE:SLG) are both mid-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, risk, valuation, analyst recommendations, profitability, institutional ownership and earnings.

Profitability

This table compares Highwoods Properties and SL Green Realty Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Highwoods Properties 18.79% 5.96% 2.82%
SL Green Realty Corporation 7.20% 1.43% 0.72%

Valuation & Earnings

This table compares Highwoods Properties and SL Green Realty Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Highwoods Properties $683.61 million 7.77 $366.80 million $1.24 41.49
SL Green Realty Corporation $1.53 billion 6.42 $871.44 million $0.97 102.27

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

Insider and Institutional Ownership

99.5% of Highwoods Properties shares are held by institutional investors. 1.9% of Highwoods Properties shares are held by insiders. Comparatively, 3.1% of SL Green Realty Corporation 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.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Highwoods Properties and SL Green Realty Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Highwoods Properties 0 2 2 0 2.50
SL Green Realty Corporation 0 8 6 0 2.43

Highwoods Properties presently has a consensus target price of $54.67, indicating a potential upside of 6.25%. SL Green Realty Corporation has a consensus target price of $115.91, indicating a potential upside of 16.84%. Given SL Green Realty Corporation’s higher possible upside, analysts plainly believe SL Green Realty Corporation is more favorable than Highwoods Properties.

Volatility & Risk

Highwoods Properties has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500. Comparatively, SL Green Realty Corporation has a beta of 1.18, suggesting that its share price is 18% more volatile than the S&P 500.

Dividends

Highwoods Properties pays an annual dividend of $1.76 per share and has a dividend yield of 3.4%. SL Green Realty Corporation pays an annual dividend of $3.10 per share and has a dividend yield of 3.1%. Highwoods Properties pays out 141.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. SL Green Realty Corporation pays out 319.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. SL Green Realty Corporation has increased its dividend for 5 consecutive years. Highwoods Properties is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Highwoods Properties beats SL Green Realty Corporation on 9 of the 17 factors compared between the two stocks.

Highwoods Properties Company Profile

Highwoods Properties, Inc. is an office real estate investment trust (REIT). The Company’s primary business is the operation, acquisition and development of office properties. The Company’s segments include Office and Other. The Company owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Greensboro, Memphis, Nashville, Orlando, Pittsburgh, Raleigh, Richmond and Tampa. The Company conducts its activities through Highwoods Realty Limited Partnership (the Operating Partnership). The Company offers a range of real estate services to its customers. The Company offers services, including asset management, construction management, design and space planning, and renovation and re-positioning. The Company provides its customers with services, such as build-to-suit construction and space modification, including tenant improvements and expansions.

SL Green Realty Corporation Company Profile

SL Green Realty Corp. is a self-managed real estate investment trust (REIT), with in-house capabilities in property management, acquisitions and dispositions, financing, development and redevelopment, construction and leasing. The Company operates through two segments: real estate, and debt and preferred equity investments. It acquires, owns, repositions, manages and leases commercial office, retail and multifamily properties in the New York Metropolitan area. Its debt and preferred equity activities include purchases and originations, inclusive of advances under future funding obligations, discount and fee amortization, and paid-in-kind interest. As of December 31, 2016, the Company owned or held interests in 24 consolidated commercial office buildings encompassing approximately 16.1 million rentable square feet and seven unconsolidated commercial office buildings encompassing approximately 6.6 million rentable square feet located primarily in midtown Manhattan.

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