Financial Review: Highwoods Properties (NYSE:HIW) versus Broadstone Net Lease (NYSE:BNL)

Highwoods Properties (NYSE:HIW) and Broadstone Net Lease (NYSE:BNL) are both mid-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, analyst recommendations, valuation, profitability and risk.

Dividends

Highwoods Properties pays an annual dividend of $2.00 per share and has a dividend yield of 7.5%. Broadstone Net Lease pays an annual dividend of $1.16 per share and has a dividend yield of 7.4%. Highwoods Properties pays out 163.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Broadstone Net Lease pays out 120.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation & Earnings

This table compares Highwoods Properties and Broadstone Net Lease’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Highwoods Properties	$832.52 million	3.38	$148.71 million	$1.22	21.76
Broadstone Net Lease	$442.89 million	6.71	$155.48 million	$0.96	16.42

Broadstone Net Lease has lower revenue, but higher earnings than Highwoods Properties. Broadstone Net Lease is trading at a lower price-to-earnings ratio than Highwoods Properties, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Highwoods Properties and Broadstone Net Lease’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Highwoods Properties	15.78%	5.44%	2.18%
Broadstone Net Lease	42.23%	5.60%	3.41%

Volatility & Risk

Highwoods Properties has a beta of 1.27, meaning that its stock price is 27% more volatile than the S&P 500. Comparatively, Broadstone Net Lease has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500.

Insider & Institutional Ownership

96.3% of Highwoods Properties shares are owned by institutional investors. Comparatively, 89.1% of Broadstone Net Lease shares are owned by institutional investors. 1.8% of Highwoods Properties shares are owned by company insiders. Comparatively, 0.8% of Broadstone Net Lease shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and target prices for Highwoods Properties and Broadstone Net Lease, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Highwoods Properties	1	5	2	0	2.13
Broadstone Net Lease	1	4	1	0	2.00

Highwoods Properties currently has a consensus price target of $24.75, indicating a potential downside of 6.78%. Broadstone Net Lease has a consensus price target of $16.75, indicating a potential upside of 6.28%. Given Broadstone Net Lease’s higher possible upside, analysts clearly believe Broadstone Net Lease is more favorable than Highwoods Properties.

Summary

Highwoods Properties beats Broadstone Net Lease on 9 of the 16 factors compared between the two stocks.

About Highwoods Properties

Highwoods Properties, Inc., headquartered in Raleigh, is a publicly-traded (NYSE:HIW), fully-integrated office real estate investment trust (REIT) that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. Highwoods is in the work-placemaking business. We believe that by creating environments and experiences where the best and brightest can achieve together what they cannot apart, we can deliver greater value to our customers, their teammates and, in turn, our stakeholders.

About Broadstone Net Lease

BNL is an industrial-focused, diversified net lease REIT that acquires, owns, and manages primarily single-tenant commercial real estate properties that are net leased on a long-term basis to a diversified group of tenants. Utilizing an investment strategy underpinned by strong fundamental credit analysis and prudent real estate underwriting, as of September 30, 2023, BNL's diversified portfolio consisted of 800 individual net leased commercial properties with 793 properties located in 44 U.S. states and seven properties located in four Canadian provinces across the industrial, healthcare, restaurant, retail, and office property types.