Taubman Centers Inc. (TCO), a real estate investment trust (REIT), has recently increased its dividend payout by 2.8% to a quarterly payment of 46.25 cents per share or $1.85 on an annualized basis. The first quarter 2012 dividend is payable on March 30, 2012 to shareholders of record as on March 15, 2012.
The current dividend hike follows a 2.9% dividend increase in December 2011 to a then quarterly payment of 45 cents per share or $1.80 on an annualized basis. Since its initial public offering in 1992, Taubman Centers has never reduced its common dividend, while increasing the same on 15 occasions. A steady dividend payout facilitates the long-term strategy of Taubman Centers to provide attractive risk-adjusted returns to its stockholders.
Investors looking for high dividend yields are increasingly favoring REITs like Taubman Centers. Solid dividend payouts are arguably the biggest enticement for REIT investors as the U.S. law requires REITs to distribute 90% of their annual taxable income in the form of dividends to shareholders.
Taubman Centers owns, develops, acquires and operates regional and super-regional shopping centers throughout the U.S. and Asia. Retail shopping centers spanning over 400,000 square feet of gross leaseable area (GLA) are generally referred to as regional shopping centers, while those with GLA in excess of 800,000 square feet are called super-regional shopping centers.
A large number of these shopping centers are strategically located in major metropolitan areas, including Los Angeles, San Francisco, Denver, Detroit, Phoenix, Miami, Dallas, Tampa, Orlando and Washington DC.
Taubman Centers has a strong portfolio of the best-in-class retail malls that generate the highest average sales per square foot in the country. Mall tenant sales improved 14.2% during fourth quarter 2011 on a year-over-year basis to $641 per square foot – a record of sorts for the company and for the publicly held U.S. regional mall industry.
Taubman Centers has one of the strongest balance sheets in its sector. The company also has moderate debt maturities in 2012. The company’s debt to total market cap ratio was 38.5% at year-end 2011, with $24.0 million of cash and cash equivalents.
In addition, the company has taken prudent steps to reduce operating expenses by pruning its pre-development spending in the U.S. and Asia, as well as significantly reducing its overall workforce. This, in turn, has improved the bottom line of the company and has enabled a steady dividend payout.
We maintain our Neutral recommendation on Taubman Centers, which presently has a Zacks #3 Rank that translates into a short-term Hold rating. We also have a Neutral recommendation and a Zacks #3 Rank for Equity One Inc. (EQY), one of the peers of Taubman Centers.
EQUITY ONE INC (EQY): Free Stock Analysis Report
TAUBMAN CENTERS (TCO): Free Stock Analysis Report
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