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Tanger Factory Outlet Centers: Not Your Typical Mall Stock

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Here's what investors should keep in mind about this unique retail REIT.

Tanger Factory Outlet Centers (SKT 1.53%) is a close cousin of the mall REIT subsector, but it isn't quite the same thing. In this Fool Live video clip, recorded on Nov. 4, Fool.com contributors Matt Frankel, Tyler Crowe, and Jason Hall discuss the key differences between Tanger and other mall REITs investors need to know. 

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Tyler Crowe: Is this like a sustained trajectory or is this a easing of the pandemic euphoric bump in in-person shopping, sort of thing? I'm curious if maybe in two or three years of this maybe fades back to the trends we were seeing before that.

Jason Hall: I have some thoughts on that. I think it's important especially for any Fools out there that don't really understand Tanger and what makes it different than a mall stock. Tanger, again, focuses on those premium outlets. These are outdoor properties. They are generally very few of these giant anchor locations. They're mostly pretty uniform in size, so that makes it really easy to release them. That's one of the reasons that they're able to do this.

Also, so many of the brands that use their space have these omnichannel strategies, where they are a big company and they have their own e-commerce and they have their presence in other retailers, and then they operate these outlets that are their branded outlets. Tanger fits really well in that omnichannel presence. Because they tend to be outdoor, I think they're going to just be more interesting, and they've become more experiential because they're adding experiential things to some of their locations. Honestly, I think they're going to be in a position five years from now where they're going to own more outlets and they're going to be growing.

This is the point I wanted to make because we don't have a lot of time before we need to move on to our next one here. Even at the price right now, $21 a share, give or take, you go back to the dividend, I think it was about $0.37 a quarter was the highest when the dividend before they cut it was about $0.37 cents a quarter. I think they're going to get back to that level of dividend relatively soon within a couple of years. That's almost a 7% yield on today's stock price.

I still think at this price, for anybody that's looking for income, that's looking for a long term dividend investment, I think it's still a reasonable price even after the huge jump we saw in the stock price since earnings. I really believe that because I think this is a very stable business that's going to have legs. It's the kind of physical retail I think is going to prove very durable.

Matt Frankel: I would definitely agree with that. I'm not planning on selling a single share and it doesn't sound like either of you are either.

Tyler Crowe owns shares of Tanger Factory Outlet Centers. The Motley Fool recommends Tanger Factory Outlet Centers. The Motley Fool has a disclosure policy.

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