Safe Dividend Stocks for the Next Market Crash: The Macerich Company (MAC)
MAC Dividend Yield: 4.4%
5-year Annual Dividend Growth Rate: 6.1%
Macerich Co (NYSE:MAC) is America’s third largest mall REIT by market cap, and the same concerns over a shifting retail environment have caused shares to fall 21% over the past year. Part of that is with concerns over specific tenants such as Sears Holdings Corp (NASDAQ:SHLD), which are likely to go bankrupt and require re-leasing of some of its properties.
However, while Macerich may not be a grade-A REIT like Simon, management has been diligently working to recycle capital. Specifically, since 2012 the company has sold $1.5 billion in non-core properties and reinvested the capital, achieving cash yields of 7% to 11%. That’s thanks to an increasing focus on premium malls, especially on the fast-growing coasts, as well as Arizona and Texas.
These investments have allowed the company to steadily improve its occupancy while simultaneously raising rents, resulting in same store net operating income or NOI growth of 5% this year, among the best in the industry.
And while the problems of a few key tenants, such as Sears (which leases 22 locations), will slow growth in 2017 (to NOI growth projected at 3% to 4%), the negative effects of Sears will be offset by $900 million in new investments coming online over the next few years.
In addition, with a low FFO payout ratio of just 63%, the dividend remains highly secure and capable for further growth. In fact, over the long-term this time-tested REIT (founded in 1964) should be able to generate long-term dividend growth of 5% to 6%.