Simon Property (SPG) aims to enhance shareholder wealth through dividend payments and share repurchases. During the second quarter, the company increased its quarterly dividend by 11.1% to $2.00 per share, payable on August 31 to stockholders of record as of August 17.
At current market prices, Simon Property’s dividend yield is 4.5%. The company has raised its quarterly dividend in the last seven years from $0.80 in August 2011 to $2.00 in August 2018, which represents a compound annual growth rate (or CAGR) of ~14%.
Apart from this, the company during the second quarter bought back 514,659 shares of its common stock for an undisclosed amount. The company announced its first share repurchase program worth $2.0 billion in April 2015 to be completed in two years. However, in February 2017, it extended the program until March 2019.
Simon Property has maintained its dividend payout ratio (dividend payment as a percentage of funds from operations) of over 65% for the last several years. However, as the company has been able to generate higher funds from operations every year, its dividend payout in dollar terms has increased robustly. The company’s annual cash dividend payout reached $7.15 per share in 2017 from $3.3 in 2011. With the recent hike, the annual dividend for 2018 will reach $7.95 per share, a YoY increase of 11%.
Dividend yield in comparison with peers
When compared with its top peers, Simon Property has the lowest dividend yield in the retail REIT space. Currently, the company has a dividend yield of 4.3%, while competitors Kimco Realty (KIM), Realty Income (O), and National Retail Properties (NNN) have a yield of 6.9%, 4.8%, and 4.5%, respectively.
Simon Property makes up ~8.1% of the SPDR Dow Jones REIT ETF (RWR).