Head-To-Head Survey: Dynex Capital (NYSE:DX) & Invesco Mortgage Capital (NYSE:IVR)

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

Institutional & Insider Ownership

38.3% of Dynex Capital shares are owned by institutional investors. Comparatively, 40.5% of Invesco Mortgage Capital shares are owned by institutional investors. 0.8% of Dynex Capital shares are owned by company insiders. Comparatively, 0.2% of Invesco Mortgage Capital shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for Dynex Capital and Invesco Mortgage Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dynex Capital	1	1	3	0	2.40
Invesco Mortgage Capital	1	2	1	0	2.00

Dynex Capital currently has a consensus price target of $13.38, suggesting a potential upside of 33.34%. Invesco Mortgage Capital has a consensus price target of $8.38, suggesting a potential upside of 66.34%. Given Invesco Mortgage Capital’s higher probable upside, analysts clearly believe Invesco Mortgage Capital is more favorable than Dynex Capital.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Dynex Capital	-4.65%	10.30%	1.17%
Invesco Mortgage Capital	-8.49%	26.75%	2.80%

Dividends

Dynex Capital pays an annual dividend of $2.04 per share and has a dividend yield of 20.3%. Invesco Mortgage Capital pays an annual dividend of $1.44 per share and has a dividend yield of 28.6%. Dynex Capital pays out 971.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Invesco Mortgage Capital pays out -800.0% of its earnings in the form of a dividend. Dynex Capital has raised its dividend for 5 consecutive years. Invesco Mortgage Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Dynex Capital and Invesco Mortgage Capital”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dynex Capital	$533.52 million	4.88	$319.07 million	$0.21	47.77
Invesco Mortgage Capital	$295.29 million	1.86	$101.28 million	($0.18)	-27.97

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

Risk & Volatility

Dynex Capital has a beta of 1.01, meaning that its stock price is 1% more volatile than the S&P 500. Comparatively, Invesco Mortgage Capital has a beta of 1.73, meaning that its stock price is 73% more volatile than the S&P 500.

Summary

Dynex Capital beats Invesco Mortgage Capital on 10 of the 17 factors compared between the two stocks.

About Dynex Capital

Dynex Capital, Inc. is a mortgage real estate investment trust (REIT) that invests primarily in mortgage-backed securities issued or guaranteed by U.S. government agencies. Its portfolio includes securities backed by residential and commercial mortgages. The company manages its portfolio of mortgage assets and related financing with the goal of generating income for shareholders. Its investments are primarily tied to the U.S. mortgage market. Founded in 1987, Dynex Capital is based in Glen Allen, Virginia.

About Invesco Mortgage Capital

Invesco Mortgage Capital Inc. is a real estate investment trust that invests in mortgage-related assets, with a portfolio focused on residential and commercial mortgage-backed securities and mortgage loans. Its investments include securities backed by U.S. government agencies as well as non-agency securities. Founded in 2009, the company is externally managed by Invesco Advisers, Inc., an investment adviser affiliated with Invesco Ltd. Its activities are primarily focused on U.S. mortgage markets.