Strong Buy 6.16% Yield Won't Be On Sale Forever

This research report was produced by The REIT Forum with assistance from Big Dog Investments.
Tanger Factory Outlet Centers (SKT) is a solid REIT with a great dividend track record.

Source: SKT
Management has been prudent in protecting their balance sheet and keeping leverage low.

Source: SKT
They are very firmly within the investment grade credit rating and have significant excess cash flow even after paying the common dividend.
The bears on SKT must be ignoring a few simple fundamental factors.
SKT fundamentals If SKT's net operating income is simply flat over the next several years, SKT would still be a very reasonable investment. If net operating income was flat, we would expect very minimal pressure on total FFO as interest rates increase and a portion of the debt is refinanced.
The impact to total FFO should be quite small. Since SKT has so much excess cash flow after all of their operating expenses, common dividends, and capitalized expenditures for the properties, they are free to repurchase shares. By our estimate, they could reasonably shrink the number of shares outstanding by around 2% per year. That means even with flat FFO or an extremely minor decline in total FFO, the FFO per share would still be increasing. This also assumes SKT would continue to raise their dividend and maintain a similar payout ratio on FFO per share.
We see the above as the bear case scenario.
More likely scenario for SKT It is more likely... Read more