Pro: this real estate stock is ‘very cheap’ right now
Simon Property Group Inc (NYSE: SPG) sure has had a hard time this year but much of that pain, as per Chuck Lieberman (Advisors Capital Management) is now in the rearview mirror.
SPG is not an expensive stock at current levels
It’s a real estate investment trust (REIT) that owns some of the best malls (eight in total) in the country. It’s a very cheap stock trading at around eight times next year’s earnings and it’s a play that benefits from inflation.
Earlier this month, the U.S. Bureau of Labour Statistics said consumer prices were up 0.1% in August (read more). Consequently, many expect the central bank to lift rates by another 75 basis points on September 21st.
The stock is currently down more than 35% versus the start of 2022.
Lieberman likes Simon Property Group for the dividend
In its latest reported quarter, Simon Property Group came in short of the Street expectations for revenue. Still, Lieberman likes the stock for a rather lucrative 7.0% dividend yield.
SPG has very strong dividend; 1.7 times coverage on the dividend. They’ve hiked their dividend for five quarters in a row. They reduced it during the pandemic, and they’ve been restoring it and there’s more upside still.
His constructive view is in line with Wall Street that also has a consensus “overweight” rating on the REIT with upside to $124 on average.
Simon Property Group has a return on equity of 59% (past three years) – way better than under 7.0% only for the industry at large.
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