Shares of Tanger Factory Outlet Centers Inc (NYSE:SKT) will begin trading ex-dividend in 3 days. To qualify for the dividend check of $0.35 per share, investors must have owned the shares prior to 27 April 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Is this future income a persuasive enough catalyst for investors to think about Tanger Factory Outlet Centers as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail. See our latest analysis for Tanger Factory Outlet Centers
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is their annual yield among the top 25% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share amount increased over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Tanger Factory Outlet Centers fit our criteria?
REITs are a special-case dividend payer. This is because a high percentage of their earnings are required to be paid out as dividends. The current trailing twelve-month payout ratio for SKT is 193.84%, meaning that a portion of dividend payments are funded by retained earnings. Going forward, analysts expect SKT’s payout to reduce to 146.68% of its earnings, which leads to a dividend yield of around 6.80%. However, EPS should increase to $1, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. SKT has increased its DPS from $0.76 to $1.4 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. Relative to peers, Tanger Factory Outlet Centers generates a yield of 6.51%, which is high for REITs stocks.
With these dividend metrics in mind, I definitely rank Tanger Factory Outlet Centers as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three important aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for SKT’s future growth? Take a look at our free research report of analyst consensus for SKT’s outlook.
- Valuation: What is SKT worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether SKT is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.