At the start of 2021, I recommended Simon Property Group (SPG) as my Top Pick for 2021, recalls Tim Plaehn, income specialist and editor of The Dividend Hunter.
At that time, the rate of Covid-19 infections and deaths had not quite peaked. Many investors believed that brick-and-mortar retailing would go the way of the dinosaurs and that e-commerce would be the primary product selling channel.
During the pandemic-triggered market crash in 2020, SPG dropped from around $150 per share to less than $50. It opened in 2021 at $82 per share. Year-to-date, the shares are up 62%. In addition, the company has paid two $1.30 per share dividends.
I remain positive about SPG for at least the rest of 2021. For the 2020 fourth quarter, Simon reported funds from operations (FFO) of $2.17 per share. At that time, full-year 2021 guidance was FFO of $9.50 to $9.75.
With the 2021 first-quarter results announced in May, quarterly FFO came in at $2.48 per share, and the full-year guidance increased by a nickel. However, the $2.48 annualized adds up to more than the high-end of the guidance.
The SPG dividend was at $2.10 per share before the pandemic. The company has paid the $1.30 dividend for four consecutive quarters. With quarterly FFO running at $2.50 per share, I expect the company will soon resume a dividend growth profile. Hopefully, with a significant increase from the $1.30 level.
Through the crisis, Simon made a number of strategic acquisitions, including buying the Taubman Group of premium malls. I expect this premium mall REIT to exit 2021 in stronger financial shape than before the pandemic.
