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Thoughts on 9.9% Dividend Yielder Tanger Factory Outlet

At about $14 bucks a share, Tanger Factory Outlet Centers Inc. (NYSE:SKT) stock is down nearly 30% this year alone and has not seen these lows since the Great Recession of 2008 and 2009.

In contrast to this severely ugly stock performance, Tanger has generated positive cash flow in its year-to-date operations and appears to be nowhere near a dire financial situation.

The 9.9% trailing dividend yield payout also appears to be secure, as Tanger's covenants limit its dividend to not exceed its funds from operations, a critical REIT metric.

In its six months of operations that ended in June, Tanger reported 15 cents earnings per share, and funds from operations of $1.09 per share compared to $1.20 a year earlier. A month later, Tanger announced a cash dividend of 35.5 cents per common share.

Nothing in Tanger's debt maturities for 2019 and 2020 appeared worrisome either. The company is expected to have $1.7 billion and $3.6 billion in debt maturities. Per its latest filings, Tanger remained in a net debt position with $1.6 billion in debt and $516 million equity.

In addition, Tanger's outlet stores remained occupied at a healthy level of 96% as of March. Same-store tenant sales also increased by 1.5% year-on-year.

Meanwhile, analysts see 26% earnings growth this fiscal year with an average price target of $15.43 versus today's price of $14.30.

The $1.3 billion outlet store operator could also be a buyout target due to its impressive dedication to providing payouts to its shareholders. Tanger could be a prospect for struggling mall operator REITS wanting to consolidate amid the ever-continuing rise of e-commerce.

For some reason, investor sentiment has turned for the worst for Tanger's stock after it missed its funds from operations estimate by 2 cents in its recent quarter.

Disclosure: Long Tanger Factory Outlet.

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This article first appeared on GuruFocus.