Tanger (SKT) Could Be a Great Choice

Tanger (SKT), a REIT in the retail sector, is highlighted as a dividend-paying stock with a current yield of 3.93% and an annualized dividend of $1.17, up 7.8% year-over-year; the company has increased its dividend 4 times in the past 5 years. With a payout ratio of 51% and an expected earnings growth rate of 5.16% for 2025, Tanger is considered a compelling investment opportunity for income investors, holding a Zacks Rank of 3 (Hold).

Analysis

Tanger (SKT), a retail-focused Real Estate Investment Trust, presents a notable profile for income-seeking investors despite a significant year-to-date stock price decline of 12.69%. The company currently offers a dividend yield of 3.93%, stemming from an annualized dividend of $1.17 per share, which represents a 7.8% increase from the prior year. This commitment to shareholder returns is further underscored by four dividend hikes over the past five years, averaging an annual increase of 7.18%. SKT maintains a payout ratio of 51% based on its trailing 12-month earnings per share, indicating a manageable distribution level. Looking ahead, consensus estimates project a 5.16% year-over-year earnings growth for fiscal year 2025, with an anticipated EPS of $2.24. While SKT's yield is below the REIT and Equity Trust - Retail industry average of 4.52%, it is considerably higher than the S&P 500's 1.57% yield. The stock currently carries a Zacks Rank of 3 (Hold), suggesting a neutral short-term outlook, and the article notes that high-yielding stocks can face headwinds during periods of rising interest rates.

Key Decisions for Investors

• Investors seeking income might consider Tanger's 3.93% dividend yield and consistent dividend growth history, especially given the recent 12.69% stock price pullback, while factoring in the neutral Zacks Rank of 3 (Hold).
• Monitor SKT's progress towards its projected 2025 earnings growth of 5.16%, as achieving this will be crucial for sustaining and potentially increasing future dividends.
• Evaluate the current yield in the context of the broader retail REIT sector, which averages 4.52%, and remain cognizant of the potential sensitivity of high-dividend stocks like SKT to fluctuations in interest rates.