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1 Retail Stock to Consider in 2022 and Beyond

By Matthew Frankel, CFP® – Dec 31, 2021 at 6:22AM

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This isn't just any mall stock.

When it comes to indoor shopping malls, there's Simon Property Group (SPG 4.10%), and then there's everyone else. In this Fool Live video clip, recorded on Dec. 13, contributor Matt Frankel discusses why Simon is in a league of its own and why he's planning to hold the stock for years to come. 

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Matt Frankel: Simon is a mall REIT, as I mentioned, they have the number one outlet market share with their premium outlet -- any property that's called Premium Outlets is a Simon property. They also are a high-end mall operator. They have a bunch of malls under the mills brand name. I know the one in Charlotte, North Carolina near me is Concord Mills. There's a lot of malls with those types of brand names.

They have a lot of high-end properties in Las Vegas, Florida, some of the most valuable malls in the world are Simon Malls. They were doing a great job of pivoting to the new retail landscape before the pandemic, so they had a head start over their competition. Simon Malls has been turning their malls into destinations for years now. They add things like entertainment venues, high-end restaurants, office spaces in some degrees, hotels built right into the mall. They've made them non-retail destinations.

What that does is it creates a built-in source of foot traffic for its retail properties, which makes them some of the most successful retail locations in the world.

They've rebounded great from the pandemic. Obviously, their malls were closed for a while last year. The same store net operating income at their malls is up 25% percent year over year. That just shows just how resilient high-end and good retail is. They are one of the most financially flexible real estate companies I know of. They have over $1 billion in cash and more than $8 billion of total liquidity, which gives them a big advantage over their competition to keep up with changing consumer taste, to keep their properties modern.

Simon malls, if you've been to one recently, are very busy. These are malls that are full of people and you would not know there was any e-commerce competition if you were walking through a Simon property.

This is a great dividend stock as well. They cut their dividend a little at the beginning of the pandemic just for uncertainty purposes. Have raised it a lot since it yields over 4% annually right now. Makes it a great dividend stock. They're best in breed as far as retail real estate is concerned. Period. That's why I ranked this so highly. I know why Danny didn't rank it very highly just because it's outside his wheelhouse and not a real estate guy but that's cool. But Simon is in a league of its own when it comes to retail real estate.

Matthew Frankel, CFP® owns Simon Property Group. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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