The Highest Dividend Yield Stocks At The Mall

| September 23, 2015

When I went to the mall the other day and pulled into my usual parking spot in the garage next to Bloomingdale’s, it suddenly dawned on me…

This wasn’t one of those driving on autopilot experiences.  I actually had to think about where I was going.

And going to the mall just doesn’t seem to be part of my world these days.

Chances are pretty good you’re in the same boat.

“Mall traffic slows” blares the Thomson-Reuters headline.

Amazon is on the brink of selling more clothing than Macy’s.

And a few weeks ago, Macy’s announced it will be shutting down 14 stores.

That’s not a huge deal when you think about it…

Less than 2% of the chain’s 790 stores.  But 1,300 people lose their jobs.

(If you’re looking for a deal, final clearance sales at Macy’s start January 12th.)

So the mall just isn’t what it used to be.

And the future of regional malls and shopping centers is riddled with uncertainty.

Why was I going to the mall?

To go to the Apple $AAPL store and get some help at the Genius Bar.  No wonder malls cut sweet deals on the lease for Apple.  Apple stores drive traffic.

So as more and more people avoid the mall, you’ve got more and more reasons to avoid the temptations of a lot of retail stocks.

It’s also good to proceed with caution when you’re checking out the big real estate investment trusts that own malls.

3 Retail Space REITs That Pay The Highest Dividend Yield

Most malls, regional shopping centers, and strip centers are owned by real estate investment trusts, or REITs.

None of these mall REITs pay huge dividends.  But here are 3 that pay a respectable dividend.

CBL & Associates Properties $CBL owns, owns pieces of, or manages 147 properties, including 90 regional malls and so-called open-air centers.

CBL & Associates gives you a dividend yield of 7.48%.  The dividend payout ratio is 46.5%.

Kimco Realty Corporation $KIM has interests in 727 shopping centers.  Kimco’s yield is 4.27% and the dividend payout ratio is 62.7%.

Weingarten Realty Investors $WRI is involved with 232 properties.  The yield is 4.47% and the dividend payout ratio is 63.9%.

Not too shabby.  But are any of these mall rat REITs smart buys for dividend investors right now?

Prowling Through The Mall Sizing Up Dividend Yield

CBL & Associates

Naturally, we’re smitten with the 7.48% yield with CBL & Associates.   Over the past year, the stock has traded between $13.99 and $21.26.  The current price of $14.17 is reasonable… we’re not buying at a high and the price earnings ratio, the P/E Ratio, is a decent 14.63, less than the overall market.

In late August, when the markets took a hit, CBL suffered.  It was at $16.48 on August 18th.  A week later it was at $14.37, a 13% plunge.

But revenue and operating income have held steady for the past year.

CBL quietly goes about its business running malls in markets off the fashion runway in places like El Centro, California and Midland, Michigan.

Kimco Realty Corporation 

This REIT is less generous with the dividend and is trying to pay down its debt.  It’s raising cash by selling off properties in Mexico and Canada.

Like CBL & Associates, Kimco is trading close to its 52-week low and the P/E ratio is about the same at 15.5.

Income is growing year-over-year but so are expenses.  Overall asset value is up. 

Weingarten Realty Investors $WRI is trading well below its 52 week high of 38.48, close to its low for the past year.  The P/E ratio is 15.27.

Income is up each of the past three years.  Expenses are trending down.  But so is the value of the REIT’s assets.

Weingarten’s focuses on strip centers rather than big malls.  It invests in what it calls “neighborhood and community shopping centers”.

Is The Mall A Good Place to Find High Dividend Yield Stocks?

Sometimes, REITs can find a good home in your portfolio of dividend stocks.

They’re a good way to help you build your own dividend stock diversification plan.

But let’s face it…

Each one of these mall REITs has had a rough year.  And naturally, you’ve got to wonder if there’s more trouble ahead.

We don’t want to be in one of those “catch a falling knife” situations where we buy a stock while it’s heading south and hoping it has finally hit bottom.

The mall REITs just might be those falling knives.   The high yields could be tempting traps.

But here’s something to keep in mind, not just with mall REITs, but all REITs.

A lot of investors think rising interest rates poison REITs.  History tells us this isn’t the case, so I wouldn’t worry about interest rates as much as the future of the mall.

The Overlooked Spot You Can Find The Highest Dividend Yield Stocks At The Mall

Head out back by the dumpsters.

Waste Management $WM is making money at the mall no matter what happens to the rents, and no matter how retail sales are trending.

Take a look at how the stock has been doing…

Dividend Stocks Chart Waste Management $WM

Dividend Yield is 3.08%, the Dividend Payout Ratio is 60.6% and the dividend has been growing for the past 11 years.

Not bad.  The only knock on Waste Management…

It’s a bit expensive right now, trading above the overall market Price Earnings Ratio.

But if you’re looking beyond the highest yield dividend stocks for something a bit less glamorous, the dumpsters out back behind the mall aren’t a bad place to look.

Cordially,

Paul Duke
Dividend Stocks Research

Note:  Paul Duke writes and edits DividendStocksResearch.com.  Sign up for our free dividend reports and dividend newsletter at http://www.dividendstocksresearch.com/free-sign-up.  We’ll show you how to create regular income by investing in dividend stocks, easily, step-by-step.

 

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