Tanger Factory Outlet Centers Inc. (SKT - Snapshot Report) has been increasing its dividend for 19 straight years since it went public in May 1993, and currently pays a regular quarterly dividend that yields 2.4% annually. Furthermore, this Zacks Rank #2 (Buy) REIT reported solid third-quarter results in October, leading to positive FFO (funds from operations) estimate revisions for 2012 and 2013.
With its dividend return and an expected long-term FFO growth rate of around 8.6%, Tanger Factory Outlet Centers appears to be a promising pick for investors seeking both growth and income.
Impressive Earnings Story
Tanger Factory Outlet Centers is scheduled to release its fourth-quarter 2012 results on Feb 12. The Zacks Consensus Estimate for FFO is currently pegged at 45 cents per share.
On Oct 30, the company reported solid third-quarter FFO per share of 42 cents, topping the year-ago FFO by 10.6% and in line with the Zacks Consensus Estimate.
Total revenues increased 8.7% year over year to $90.5 million. Operating Income advanced 10.9% to $29.0 million. Same center net operating income increased 5.6% from 5.0% a year ago, while tenant comparable sales for the quarter advanced 7.0%.
With solid results in the third quarter, Tanger Factory Outlet Centers now expects FFO per share between $1.61 and $1.63 for 2012, reflecting an expected growth of 6% year over year in same-center net operating income.
FFO Estimates Moving Higher
The Zacks Consensus Estimate for 2012 is up 0.6% over the past 90 days to $1.63 per share, suggesting year-over-year growth of roughly 13.2%.
Moreover, the Zacks Consensus Estimate for 2013 is currently $1.82, which increased 2.2% in the last 90 days, implying year-over-year growth of 11.4%.
Tanger Factory Outlet Centers has been paying dividends regularly and last hiked its quarterly dividend rate by 5.0% to 21 cents per share for the first quarter of 2012. Based on this rate, the annual yield comes to 2.4%.
Shares of Tanger Factory Outlet Centers currently trade at 19.5x 12-month forward earnings, a 7.1% premium to the peer group average of 18.2x. Its price to book ratio of 6.5 is at a significant premium to the peer group average of 1.8. Given its strong fundamentals, the premium valuation is justified.
Moreover, the company has a trailing 12-month ROE of 9.2%, compared with the peer group average of 4.9%. This implies that the company reinvests its earnings more efficiently than its peer group.
The company has been continuously outperforming the S&P 500 since mid-April 2012, and has also been outperforming its 200 days moving averages over the past year. The stock has gained 24.3% in a years time, compared with the S&P 500s return of 13.7%.
Headquartered in Greensboro, North Carolina, Tanger Factory Outlet Centers, Inc. is a real estate investment trust. The company was founded in 1981 and currently operates and owns, or has an ownership interest in, a portfolio of 43 upscale outlet shopping centers in 26 states coast to coast and in Canada. It has a market cap of about $3.3 billion. Among other companies in the same industry: AmREIT, Inc. (AMRE) has a Zacks Rank #1 (Strong Buy), while Taubman Centers, Inc. (TCO) and Simon Property Group Inc. (SPG) hold Zacks Rank #2s (Buys).
Want More of Our Best Recommendations?
Zacks' Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Then each week he hand-selects the most compelling trades and serves them up to you in a new program called Zacks Confidential.