Retail REIT to Buy No.1: Tanger Factory Outlet Centers Inc. (SKT)
Dividend Yield: 3.6%
If there is a bright spot when it comes to brick-and-mortar retail, it would have to be outlet stores, which have singlehandedly saved many retailers from closing up shop.
Let’s face it, America has become a discount culture where price is everything.
“Off-price shoppers account for 75 percent of apparel purchases across all channels, and some traditional retailers now have more outlet stores and discount stores than full-price shops,” wrote the Business of Fashion in its 2016 review. “This focus on promotions and discounts is, moreover, becoming increasingly prevalent in other markets, such as China — where outlet malls are booming, and set to double in number by 2020.”
Tanger Factory Outlet Centers Inc. (NYSE:SKT), the only retail REIT focused entirely on outlet stores, has been a major recipient of this move to cheap. With markets all over the world looking to go discount, Tanger has plenty of future real estate acquisition opportunities ahead of it.
If you’re going to invest in a retail REIT, SKT operates in the retail sweet spot. Interestingly, Tanger stock has performed somewhat erratically the past five years; brace yourself for the odd down year, but overall, I like its business model better than most.