QTS Realty Trust (NYSE: QTS) and InfraREIT (NYSE:HIFR) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, analyst recommendations, earnings, valuation, dividends and institutional ownership.

Dividends

QTS Realty Trust pays an annual dividend of $1.56 per share and has a dividend yield of 3.0%. InfraREIT pays an annual dividend of $1.00 per share and has a dividend yield of 4.8%. QTS Realty Trust pays out 390.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. InfraREIT pays out 83.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. InfraREIT has increased its dividend for 2 consecutive years. InfraREIT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares QTS Realty Trust and InfraREIT’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
QTS Realty Trust 4.60% 2.04% 0.93%
InfraREIT 28.31% 6.28% 3.13%

Valuation & Earnings

This table compares QTS Realty Trust and InfraREIT’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
QTS Realty Trust $422.74 million 6.04 $158.07 million $0.40 130.73
InfraREIT $184.70 million 4.91 $160.52 million $1.20 17.27

InfraREIT has higher revenue, but lower earnings than QTS Realty Trust. InfraREIT is trading at a lower price-to-earnings ratio than QTS Realty Trust, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

QTS Realty Trust has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500. Comparatively, InfraREIT has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for QTS Realty Trust and InfraREIT, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
QTS Realty Trust 0 3 9 0 2.75
InfraREIT 0 2 1 0 2.33

QTS Realty Trust currently has a consensus target price of $56.82, suggesting a potential upside of 8.66%. InfraREIT has a consensus target price of $22.00, suggesting a potential upside of 6.18%. Given QTS Realty Trust’s stronger consensus rating and higher possible upside, equities analysts plainly believe QTS Realty Trust is more favorable than InfraREIT.

Insider and Institutional Ownership

84.2% of InfraREIT shares are held by institutional investors. 17.3% of QTS Realty Trust shares are held by insiders. Comparatively, 28.0% of InfraREIT shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

InfraREIT beats QTS Realty Trust on 11 of the 16 factors compared between the two stocks.

QTS Realty Trust Company Profile

QTS Realty Trust, Inc. (QTS) is a provider of secure, compliant data center solutions, hybrid cloud and fully managed services. The Company owns, develops and operates carrier-neutral and multi-tenant data centers. Its data centers are facilities that house the network and computer equipment of multiple customers and provide access to a range of communications carriers. The Company has an integrated platform through which it owns and operates its data centers and provides a range of information technology (IT) infrastructure solutions. Its spectrum of core data center products is referred to as 3Cs, which consists of Custom Data Center (C1), Colocation (C2), and Cloud and Managed Services (C3). Its 3C integrated technology platform provides information technology solutions for Web and information technology applications. Its data centers facilities are used by its customers to house, power and cool the networking equipment and computer systems that support their business processes.

InfraREIT Company Profile

InfraREIT, Inc. is a real estate investment trust. The Company is engaged in owning and leasing rate-regulated transmission and distribution (T&D) assets in Texas. It leases its T&D assets to Sharyland Utilities, L.P. Its assets are located in the Texas Panhandle near Amarillo, the Permian Basin in and around Stanton, Central Texas around Brady, Northeast Texas in and around Celeste and South Texas near McAllen. As of December 31, 2016, its T&D assets consisted of approximately 54,000 electricity delivery points, approximately 815 circuit miles of transmission lines, approximately 40,500 circuit miles of distribution lines, 57 substations and a 300 megawatt high-voltage direct current (DC) Tie between Texas and Mexico (Railroad DC Tie). As of December 31, 2016, its T&D assets in each of its leases included S/B/C Lease, McAllen Lease, competitive renewable energy zone (CREZ) Lease, Stanton Transmission Loop Lease and Electric Reliability Council of Texas (ERCOT) Transmission Lease.

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