Diversified Healthcare Trust (NASDAQ:DHC) and RLJ Lodging Trust (NYSE:RLJ) Critical Survey

Diversified Healthcare Trust (NASDAQ:DHC) and RLJ Lodging Trust (NYSE:RLJ) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, profitability, analyst recommendations, institutional ownership, earnings, risk and valuation.

Valuation & Earnings

This table compares Diversified Healthcare Trust and RLJ Lodging Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Diversified Healthcare Trust	$1.41 billion	0.45	-$293.57 million	($1.61)	-1.64
RLJ Lodging Trust	$1.33 billion	1.10	$76.40 million	$0.29	32.83

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

Volatility and Risk

Diversified Healthcare Trust has a beta of 2.17, suggesting that its stock price is 117% more volatile than the S&P 500. Comparatively, RLJ Lodging Trust has a beta of 1.68, suggesting that its stock price is 68% more volatile than the S&P 500.

Dividends

Diversified Healthcare Trust pays an annual dividend of $0.04 per share and has a dividend yield of 1.5%. RLJ Lodging Trust pays an annual dividend of $0.60 per share and has a dividend yield of 6.3%. Diversified Healthcare Trust pays out -2.5% of its earnings in the form of a dividend. RLJ Lodging Trust pays out 206.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider & Institutional Ownership

76.0% of Diversified Healthcare Trust shares are owned by institutional investors. Comparatively, 92.4% of RLJ Lodging Trust shares are owned by institutional investors. 1.4% of Diversified Healthcare Trust shares are owned by company insiders. Comparatively, 2.6% of RLJ Lodging Trust shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Diversified Healthcare Trust and RLJ Lodging Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Diversified Healthcare Trust	-26.09%	-17.55%	-7.20%
RLJ Lodging Trust	5.19%	3.58%	1.44%

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Diversified Healthcare Trust and RLJ Lodging Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Diversified Healthcare Trust	1	1	1	0	2.00
RLJ Lodging Trust	2	2	3	0	2.14

Diversified Healthcare Trust currently has a consensus target price of $4.50, suggesting a potential upside of 70.45%. RLJ Lodging Trust has a consensus target price of $10.92, suggesting a potential upside of 14.67%. Given Diversified Healthcare Trust’s higher possible upside, analysts clearly believe Diversified Healthcare Trust is more favorable than RLJ Lodging Trust.

Summary

RLJ Lodging Trust beats Diversified Healthcare Trust on 12 of the 16 factors compared between the two stocks.

About Diversified Healthcare Trust

Diversified Healthcare Trust is a real estate investment trust, which engages in the ownership of senior living communities, medical office buildings, and wellness centers. It operates through the following segments: Office Portfolio, Senior Housing Operating Portfolio (SHOP), and Non-Segment. The Office Portfolio segment consists of medical office properties leased to medical providers and other medical related businesses, as well as life science properties leased to biotech laboratories and other similar tenants. The SHOP segment manages senior living communities that offers short term and long term residential care, and other services for residents where it pay fees to the operator to manage the communities for its account. The company was founded on December 16, 1998 and is headquartered in Newton, MA.

About RLJ Lodging Trust

RLJ Lodging Trust is a self-advised, publicly traded real estate investment trust that owns primarily premium-branded, high-margin, focused-service and compact full-service hotels. The Company's portfolio currently consists of 96 hotels with approximately 21,200 rooms, located in 23 states and the District of Columbia and an ownership interest in one unconsolidated hotel with 171 rooms.