Dynex Capital (NYSE:DX) & AFC Gamma (NASDAQ:AFCG) Head to Head Analysis

Dynex Capital (NYSE:DX) and AFC Gamma (NASDAQ:AFCG) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, earnings, valuation, profitability, analyst recommendations and risk.

Institutional & Insider Ownership

38.3% of Dynex Capital shares are held by institutional investors. Comparatively, 26.5% of AFC Gamma shares are held by institutional investors. 0.8% of Dynex Capital shares are held by insiders. Comparatively, 25.1% of AFC Gamma shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Dynex Capital and AFC Gamma’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dynex Capital	34.75%	8.59%	1.14%
AFC Gamma	-70.17%	0.99%	0.62%

Dividends

Dynex Capital pays an annual dividend of $2.04 per share and has a dividend yield of 15.0%. AFC Gamma pays an annual dividend of $0.20 per share and has a dividend yield of 6.7%. Dynex Capital pays out 120.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AFC Gamma pays out -21.1% of its earnings in the form of a dividend. Dynex Capital has raised its dividend for 5 consecutive years. Dynex Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Dynex Capital and AFC Gamma”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dynex Capital	$533.52 million	5.27	$319.07 million	$1.69	8.05
AFC Gamma	$31.32 million	2.23	-$20.67 million	($0.95)	-3.13

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

Analyst Recommendations

This is a summary of current ratings and target prices for Dynex Capital and AFC Gamma, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dynex Capital	0	2	2	0	2.50
AFC Gamma	1	2	0	0	1.67

Dynex Capital presently has a consensus price target of $14.33, suggesting a potential upside of 5.41%. AFC Gamma has a consensus price target of $4.50, suggesting a potential upside of 51.52%. Given AFC Gamma’s higher possible upside, analysts clearly believe AFC Gamma is more favorable than Dynex Capital.

Risk and Volatility

Dynex Capital has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500. Comparatively, AFC Gamma has a beta of 0.84, indicating that its stock price is 16% less volatile than the S&P 500.

Summary

Dynex Capital beats AFC Gamma on 14 of the 17 factors compared between the two stocks.

About Dynex Capital

Dynex Capital, Inc., a mortgage real estate investment trust, invests in mortgage-backed securities (MBS) on a leveraged basis in the United States. It invests in agency and non-agency MBS consisting of residential MBS, commercial MBS (CMBS), and CMBS interest-only securities. Agency MBS have a guaranty of principal payment by an agency of the U.S. government or a U.S. government-sponsored entity, such as Fannie Mae and Freddie Mac. Non-Agency MBS have no such guaranty of payment. The company has qualified as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders as dividends. Dynex Capital, Inc. was incorporated in 1987 and is headquartered in Glen Allen, Virginia.

About AFC Gamma

AFC Gamma, Inc. originates, structures, underwrites, and invests in senior secured loans, and other various commercial real estate loans and debt securities for established companies operating in the cannabis industry. It primarily originates loans structured as senior loans secured by real estate, equipment, and licenses and/or other assets of the loan parties to the extent permitted by applicable laws and the regulations governing such loan parties. The company has elected and qualified to be taxed as a real estate investment trust for the United States federal income tax purposes under the Internal Revenue Code of 1986. AFC Gamma, Inc. was incorporated in 2020 and is based in West Palm Beach, Florida.