Safehold (NYSE:SAFE) versus Alexander & Baldwin (NYSE:ALEX) Financial Review

Safehold (NYSE:SAFE) and Alexander & Baldwin (NYSE:ALEX) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, risk, valuation, analyst recommendations and institutional ownership.

Dividends

Safehold pays an annual dividend of $0.70 per share and has a dividend yield of 4.6%. Alexander & Baldwin pays an annual dividend of $0.90 per share and has a dividend yield of 5.1%. Safehold pays out 47.9% of its earnings in the form of a dividend. Alexander & Baldwin pays out 105.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Safehold has raised its dividend for 1 consecutive years and Alexander & Baldwin has raised its dividend for 4 consecutive years. Alexander & Baldwin is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Safehold has a beta of 1.86, indicating that its stock price is 86% more volatile than the S&P 500. Comparatively, Alexander & Baldwin has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for Safehold and Alexander & Baldwin, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Safehold	0	4	4	0	2.50
Alexander & Baldwin	0	1	2	0	2.67

Safehold presently has a consensus target price of $25.25, suggesting a potential upside of 65.03%. Alexander & Baldwin has a consensus target price of $23.00, suggesting a potential upside of 30.90%. Given Safehold’s higher possible upside, equities analysts clearly believe Safehold is more favorable than Alexander & Baldwin.

Profitability

This table compares Safehold and Alexander & Baldwin’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Safehold	28.92%	4.76%	1.65%
Alexander & Baldwin	19.64%	5.93%	3.62%

Insider & Institutional Ownership

70.4% of Safehold shares are held by institutional investors. Comparatively, 91.3% of Alexander & Baldwin shares are held by institutional investors. 3.5% of Safehold shares are held by company insiders. Comparatively, 0.7% of Alexander & Baldwin shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Safehold and Alexander & Baldwin”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Safehold	$365.69 million	3.00	$105.76 million	$1.46	10.48
Alexander & Baldwin	$229.18 million	5.57	$29.80 million	$0.85	20.67

Safehold has higher revenue and earnings than Alexander & Baldwin. Safehold is trading at a lower price-to-earnings ratio than Alexander & Baldwin, indicating that it is currently the more affordable of the two stocks.

Summary

Safehold beats Alexander & Baldwin on 9 of the 17 factors compared between the two stocks.

About Safehold

Safehold Inc. (NYSE: SAFE) is revolutionizing real estate ownership by providing a new and better way for owners to unlock the value of the land beneath their buildings. Having created the modern ground lease industry in 2017, Safehold continues to help owners of high quality multifamily, office, industrial, hospitality, student housing, life science and mixed-use properties generate higher returns with less risk. The Company, which is taxed as a real estate investment trust (REIT), seeks to deliver safe, growing income and long-term capital appreciation to its shareholders.

About Alexander & Baldwin

Alexander & Baldwin, Inc. engages in the real estate business. It operates through the Commercial Real Estate and Land Operations segments. The Commercial Real Estate segment includes investments and acquisitions, construction and development, and in-house leasing and property management. The Land Operations segment consists of legacy landholdings, assets, and liabilities subject to the company’s simplification and monetization effort. The company was founded by Samuel Thomas Alexander and Henry Perrine Baldwin in 1870 and is headquartered in Honolulu, HI.