Simon Property Group Offers Shareholders 5% Dividend Yield (SPG)
By: Ned Piplovic,
Simon Property Group Inc. (NYSE:SPG) is trying to buck the declining trend of retail-related sectors. It has boosted its dividend for the past seven consecutive years and offers its shareholders a 4.9% dividend yield.
While most retail-related companies experienced significant declines in their business and share price, the Simon Property Group is one of only few retail real-estate-based companies that managed buck the trend and might be positioned well to convert its strong financials and a diverse asset portfolio into a solid growth with robust total returns over the near term.
Investors convinced that the share price might continue to recover should do their research and at least place this stock on a watch list. While some investors are more comfortable waiting for clearer indicators, investors that are less risk-averse might want to consider acting sooner to lock in discounted rates now. Additionally, Investors that take a position prior to the company’s next ex-dividend date on May 16, 2018, will be eligible for the next round of dividend distributions on the company’s next dividend pay date, which will occur on May 31, 2018.
Simon Property Group, Inc. (NYSE:SPG)
Headquartered in Indianapolis, Indiana, and founded in 1960, Simon Property Group is a real estate investment trust (REIT) that owns, develops and manages retail a portfolio of regional malls, premium outlet centers and community/lifestyle centers. As of December 31, 2007, the company owned or held an interest in more than 320 income-producing properties — 209 properties in 37 U.S. states and Puerto Rico, as well as more than 100 additional properties in Europe and Asia. Some of the premium properties include the Fashion Centre at Pentagon City in Arlington, Virginia; Woodbury Common Premium Outlets in Central Valley, New York, and The Forum Shops at the Caesar’s Palace Hotel in Las Vegas, Nevada.
Like the rest of the retail market, the company’s share price declined for nearly a year after reaching its all-time high in July 2016. However, while most of the other retail-related companies continued the slide, SPG‘s share price stabilized and has traded relatively flat with minor volatility over the past year. The share price ascended slowly between $162.46 the beginning of the trailing 12-month period and its 52-week high of $172.42 on January 2, 2018 — a 6.1% gain.
After the January peak, SFG’s share price declined nearly 15% to reach its 52-week low of $146.74 by April 25, 2018. A strong quarterly results report in late April pushed the share price 8.2% higher to close on May 8, 2018, at $158.75. This closing price was just 2.3% short of its price level from 12 months earlier and less than 8% below the 52-week from the beginning of January 2018.
After dropping below the 50-day Moving Average (MA) and the 200-day MA on February 1, 2018, the late-April spike pushed the share price back above the 50-day MA and challenged the 200-day MA resistance level at $160 three times in the past week. The 50-day MA has been rising since April 26, 2018, and if the share price manages to break above the 200-day MA at the $160 resistance level, the price could continue to rise towards the analysts’ average target price of $185.
The company’s $1.95 current quarterly dividend amount is 11.4% higher than the $1.75 distribution from the same period last year and yields 4.9%, which is 40% higher than SPG’s 3.5% average dividend yield over the past five years. Additionally, the REIT’s current dividend yield is 54% higher than the 3.2% average dividend yield of the overall Financials sector and 4.5% higher than the 4.7% simple average dividend yield of all the company’s peers in the Retail REITs market segment.
The current $1.75 quarterly amount converts to a $7.80 annualized dividend for 2018. However, the actual total annual dividend for the year might end up even slightly higher, as the company has boosted its quarterly dividend in the third or fourth quarter over the past eight years. Over those eight years of consecutive dividend hikes, the company tripled its total annual dividend amount by boosting its dividends at an average rate of 14.7% per year.
After returning a 4.4% total loss over the last three years because of the share price decline, the company’s share price made some gains and combined with the rising dividends to offer the company’s shareholders a 2.1% total return over the past 12 months. The total return over the past five years was nearly 12%. While those total returns might seem insignificant, the improving U.S. economy might provide a boost to the retail sector. In that that case, the Simon Property Group and its shareholders will be well-positioned to reap the benefits of such expansion.
Dividend increases and dividend decreases, new dividend announcements, dividend suspensions and other dividend changes occur daily. To make sure you don’t miss any important announcements, sign up for our E-mail Alerts. Let us do the hard work of gathering the data and sending the relevant information directly to your inbox.
In addition to E-mail Alerts, you will have access to our powerful dividend research tools. Take a quick video tour of the tools suite.
Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.