Reviewing Lument Finance Trust (NYSE:LFT) and NETSTREIT (NYSE:NTST)

NETSTREIT (NYSE:NTST) and Lument Finance Trust (NYSE:LFT) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, risk, profitability, institutional ownership, valuation, earnings and analyst recommendations.

Volatility and Risk

NETSTREIT has a beta of 0.97, meaning that its share price is 3% less volatile than the S&P 500. Comparatively, Lument Finance Trust has a beta of 1.07, meaning that its share price is 7% more volatile than the S&P 500.

Valuation & Earnings

This table compares NETSTREIT and Lument Finance Trust’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NETSTREIT	$131.90 million	9.79	$6.84 million	$0.09	185.47
Lument Finance Trust	$34.79 million	3.70	$19.72 million	$0.32	7.69

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

Insider & Institutional Ownership

19.5% of Lument Finance Trust shares are owned by institutional investors. 0.5% of NETSTREIT shares are owned by insiders. Comparatively, 2.7% of Lument Finance Trust shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares NETSTREIT and Lument Finance Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NETSTREIT	3.32%	0.39%	0.25%
Lument Finance Trust	16.91%	14.10%	1.87%

Dividends

NETSTREIT pays an annual dividend of $0.82 per share and has a dividend yield of 4.9%. Lument Finance Trust pays an annual dividend of $0.32 per share and has a dividend yield of 13.0%. NETSTREIT pays out 911.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lument Finance Trust pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lument Finance Trust has increased its dividend for 2 consecutive years. Lument Finance Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings for NETSTREIT and Lument Finance Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NETSTREIT	1	4	5	1	2.55
Lument Finance Trust	0	0	2	0	3.00

NETSTREIT currently has a consensus target price of $17.88, indicating a potential upside of 7.10%. Lument Finance Trust has a consensus target price of $2.50, indicating a potential upside of 1.63%. Given NETSTREIT’s higher possible upside, analysts clearly believe NETSTREIT is more favorable than Lument Finance Trust.

Summary

Lument Finance Trust beats NETSTREIT on 12 of the 18 factors compared between the two stocks.

About NETSTREIT

NETSTREIT Corp. is an internally managed real estate investment trust (REIT) based in Dallas, Texas that specializes in acquiring single-tenant net lease retail properties nationwide. The growing portfolio consists of high-quality properties leased to e-commerce resistant tenants with healthy balance sheets. Led by a management team of seasoned commercial real estate executives, NETSTREIT's strategy is to create the highest quality net lease retail portfolio in the country with the goal of generating consistent cash flows and dividends for its investors.

About Lument Finance Trust

Lument Finance Trust, Inc., a real estate investment trust, focuses on investing in, financing, and managing a portfolio of commercial real estate (CRE) debt investments in the United States. The company primarily invests in transitional floating rate CRE mortgage loans on middle market multi-family assets; and other CRE -related investments, including mezzanine loans, preferred equity, commercial mortgage-backed securities, fixed rate loans, construction loans, and other CRE debt instruments. Lument Finance Trust, Inc. is qualified as a real estate investment trust (REIT) under the Internal Revenue Code of 1986. As a REIT, it would not be subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Hunt Companies Finance Trust, Inc. and changed its name to Lument Finance Trust, Inc. in December 2020. Lument Finance Trust, Inc. was incorporated in 2012 and is headquartered in New York, New York.