Head-To-Head Survey: Rayonier (NYSE:RYN) and Redwood Trust (NYSE:RWT)

Rayonier (NYSE:RYN) and Redwood Trust (NYSE:RWT) are both construction companies, but which is the better business? We will compare the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, earnings, institutional ownership and risk.

Dividends

Rayonier pays an annual dividend of $1.14 per share and has a dividend yield of 3.8%. Redwood Trust pays an annual dividend of $0.64 per share and has a dividend yield of 8.6%. Rayonier pays out 101.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Redwood Trust pays out 914.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a breakdown of recent ratings for Rayonier and Redwood Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rayonier	0	2	0	0	2.00
Redwood Trust	0	3	5	1	2.78

Rayonier presently has a consensus target price of $32.50, indicating a potential upside of 8.51%. Redwood Trust has a consensus target price of $7.69, indicating a potential upside of 3.98%. Given Rayonier’s higher possible upside, analysts clearly believe Rayonier is more favorable than Redwood Trust.

Volatility & Risk

Rayonier has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500. Comparatively, Redwood Trust has a beta of 1.58, indicating that its share price is 58% more volatile than the S&P 500.

Earnings and Valuation

This table compares Rayonier and Redwood Trust’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rayonier	$1.05 billion	4.26	$173.49 million	$1.12	26.74
Redwood Trust	$724.00 million	1.35	-$2.27 million	$0.07	105.71

Rayonier has higher revenue and earnings than Redwood Trust. Rayonier is trading at a lower price-to-earnings ratio than Redwood Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Rayonier and Redwood Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rayonier	15.92%	3.21%	1.62%
Redwood Trust	3.06%	4.83%	0.38%

Institutional and Insider Ownership

89.1% of Rayonier shares are owned by institutional investors. Comparatively, 74.3% of Redwood Trust shares are owned by institutional investors. 0.8% of Rayonier shares are owned by company insiders. Comparatively, 2.5% of Redwood Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Rayonier beats Redwood Trust on 9 of the 17 factors compared between the two stocks.

About Rayonier

Rayonier is a leading timberland real estate investment trust with assets located in some of the most productive softwood timber growing regions in the United States and New Zealand. As of December 31, 2023, Rayonier owned or leased under long-term agreements approximately 2.7 million acres of timberlands located in the U.S. South (1.85 million acres), U.S. Pacific Northwest (418,000 acres) and New Zealand (421,000 acres).

About Redwood Trust

Redwood Trust, Inc., together with its subsidiaries, operates as a specialty finance company in the United States. The company operates through three segments: Residential Consumer Mortgage Banking, Residential Investor Mortgage Banking, and Investment Portfolio. The Residential Consumer Mortgage Banking segment operates a mortgage loan conduit that acquires residential loans from third-party originators for subsequent sale, securitization, or transfer to its investment portfolio. This segment also offers derivative financial instruments to manage risks associated with residential loans. The Residential Investor Mortgage Banking segment operates a platform that originates business purpose loans to investors in single-family and multifamily residential properties and bridge loans for subsequent securitization, sale, or transfer into its investment portfolio. The Investment Portfolio segment invests in securities retained from residential consumer and investor securitization activities, and business purpose lending bridge loans, as well as residential mortgage-backed securities issued by third parties, Freddie Mac K-Series multifamily loan securitizations and reperforming loan securitizations, servicer advance investments, home equity investments, and other housing-related investments. The company is elected to be taxed as a real estate investment trust (REIT) for federal income tax purposes. Redwood Trust, Inc. was incorporated in 1994 and is headquartered in Mill Valley, California.