Reviewing Spirit Realty Capital (SRC) & W.P. Carey (WPC)

W.P. Carey (NYSE: WPC) and Spirit Realty Capital (NYSE:SRC) are both mid-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, profitabiliy, valuation, analyst recommendations, institutional ownership, earnings and risk.

Analyst Recommendations

This is a breakdown of current recommendations for W.P. Carey and Spirit Realty Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
W.P. Carey	1	2	1	0	2.00
Spirit Realty Capital	2	7	4	0	2.15

W.P. Carey currently has a consensus price target of $67.67, suggesting a potential upside of 1.82%. Spirit Realty Capital has a consensus price target of $10.84, suggesting a potential upside of 28.59%. Given Spirit Realty Capital’s stronger consensus rating and higher probable upside, analysts plainly believe Spirit Realty Capital is more favorable than W.P. Carey.

Valuation and Earnings

This table compares W.P. Carey and Spirit Realty Capital’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
W.P. Carey	$884.11 million	8.01	$715.85 million	$2.59	25.66
Spirit Realty Capital	$667.15 million	6.12	$586.47 million	$0.14	60.21

W.P. Carey has higher revenue and earnings than Spirit Realty Capital. W.P. Carey is trading at a lower price-to-earnings ratio than Spirit Realty Capital, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares W.P. Carey and Spirit Realty Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
W.P. Carey	34.97%	8.10%	3.35%
Spirit Realty Capital	9.47%	1.74%	0.82%

Volatility & Risk

W.P. Carey has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500. Comparatively, Spirit Realty Capital has a beta of 0.55, meaning that its stock price is 45% less volatile than the S&P 500.

Institutional & Insider Ownership

49.4% of W.P. Carey shares are held by institutional investors. Comparatively, 93.8% of Spirit Realty Capital shares are held by institutional investors. 1.3% of W.P. Carey shares are held by insiders. Comparatively, 0.5% of Spirit Realty Capital 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

W.P. Carey pays an annual dividend of $4.00 per share and has a dividend yield of 6.0%. Spirit Realty Capital pays an annual dividend of $0.72 per share and has a dividend yield of 8.5%. W.P. Carey pays out 154.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Spirit Realty Capital pays out 514.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. W.P. Carey has increased its dividend for 2 consecutive years and Spirit Realty Capital has increased its dividend for 16 consecutive years. Spirit Realty Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

W.P. Carey beats Spirit Realty Capital on 11 of the 17 factors compared between the two stocks.

W.P. Carey Company Profile

W. P. Carey provides long-term, sale-leaseback and build-to-suit transactions for companies worldwide, and manages a global investment portfolio. It has two primary business segments. Under the investment management segment, the Company earns revenue as the advisor to publicly owned, non-actively traded real estate investment trusts (REITs), which are sponsored by the Company under the Corporate Property Associates brand name (the CPA REITs) and invests in similar properties. Under the real estate ownership segment, the Company owns and invests in commercial properties in the United States and the European Union that are then leased to companies, primarily on a single-tenant, triple-net leased basis. As of December 31, 2009, it operated as advisor to Corporate Property Associates 14 Incorporated, Corporate Property Associates 15 Incorporated, Corporate Property Associates 16 – Global Incorporated and Corporate Property Associates 17 – Global Incorporated.

Spirit Realty Capital Company Profile

Spirit Realty Capital, Inc. is a self-administered and self-managed real estate investment trust (REIT). The Company’s operations are carried out through Spirit Realty, L.P. (the Operating Partnership). The Company invests in single-tenant, operationally essential real estate throughout the United States that is leased on a long-term, triple-net basis primarily to tenants engaged in retail, service and distribution industries. Single-tenant, operationally essential real estate consists of properties that are generally free-standing, commercial real estate facilities where its tenants conduct retail, service or distribution activities. as of December 31, 2012, the Company’s portfolio of 1,122 owned properties were leased to approximately 165 tenants.