Dividend Growth Stock Overview: Tanger Factory Outlet Centers

The Gap is one of the leading retailers at Tanger Factory Outlets around the
United States.
Photo courtesy Ryan McKnight/flickr.com.

About Tanger Factory Outlet Centers

Tanger Factory Outlet Centers, Inc. is a real estate investment trust (REIT) that develops and operates factory outlets around the United States. The company was formed in 1981 and, by the time it incorporated and began trading publicly in 1993, was operating 17 outlet centers with 1.5 million square feet of retail space. Tanger Factory Outlet Centers operates more than 35 outlet centers with 11.3 million square feet of retail space and has partial ownership in 9 other outlet centers, including 4 in Canada.

Tanger’s properties focus on upscale retailers, with no one single tenant comprising more than 8% of the total retail space or more than 10% of the company’s rental revenues. Examples of retailers that sell at Tanger properties include The Gap, Tommy Hilfiger, Dress Barn, and Polo Ralph Lauren. Across all of Tanger’s properties, there are more than 2,400 stores and 380 store brands.

The company is continually looking for additional properties on which to develop and open new factory outlets. While there are exceptions, in general the company seeks to open outlet centers in locations with a population of at least 1 million people within a radius of 40 miles, where the average household income is at least $65,000 a year, and on a site with frontage on a major roadway that has a traffic count of at least 55,000 cars a day. Tanger looks for target sites that can support an outlet center with about 90 stores with a total of at least 350,000 square feet. Before acquiring a site and beginning construction, Tanger requires signed leases for at least 50% of the space in the property to reduce the risk to the company and once construction begins, the factory outlet center can usually be opened within a year.

With that in mind, Tanger has recently opened or will soon be opening three new outlet centers, at the Foxwoods Resort Casino in Manshantucket, Connecticut; in Grand Rapids, Michigan; and in Southhaven, Mississippi, and is considering a new development in Columbus, Ohio.

The company is a member of the S&P Mid Cap 400 index and S&P’s High Yield Dividend Aristocrats index, and trades under the ticker symbol SKT.

Tanger Factory Outlet Centers’ Dividend and Stock Split History

Tanger Factory Outlet Center Dividends

Tanger Factory Outlet Centers has compounded its dividend at nearly 10% since 2011.

Tanger Factory Outlet Centers has increased its dividend payout year-over-year since 1995. Since then, the company has announced dividend increases at the beginning of April, with the stock going ex-dividend at the end of April. Tanger Outlet’s most recent increase was a 14.0% increase in April 2016 to an annualized rate of $1.30 per share. Based on historical patterns, I expect Tanger Outlet Centers to announce its 23rd consecutive annual dividend increase in April 2017.

The most recent dividend increase of nearly 15% is unusual for Tanger Outlet Centers. Since 1995, the year-over-year dividend increases have generally not exceeded 9% and in most cases have been in the low to mid-single digits. Tanger has averaged an annual dividend growth rate since 2011 of 9.68%. The longer term average dividend growth rates are lower, with 10-year and 20-year average dividend growth rates of 6.50% and 4.58%, respectively.

Tanger Factory Outlet Centers Inc has split its stock 2-for-1 twice – in December 2004 and January 2011. A single share of stock purchased when Tanger Outlet Centers began growing its dividend would have split into 4 shares.

Over the 5 years ending on December 31, 2015, Tanger Factory Outlet Centers stock appreciated at an annualized rate of 7.83%, from a split-adjusted $22.03 to $32.12. This underperformed both the 10.2% annualized return of the S&P 500 and the 9.0% annualized return of the S&P Mid Cap 400 index during this time.

Tanger Factory Outlet Centers’ Direct Purchase and Dividend Reinvestment Plans

Tanger Factory Outlet Centers Inc has both direct purchase and dividend reinvestment plans. You will need to be a current shareholder to participate in the plans, which means that if you own shares through your broker, you’ll need to have them transferred into your name. Once enrolled, the minimum investment amount for the direct purchase plan is $50 per transaction.

The fee structure of the plans is not favorable to investors. There is no setup fee to join the plan, but when purchasing shares under the direct purchase plan you’ll pay a transaction fee of $5 and a commission of 5 cents per share unless you set up regular automatic debits from your checking or savings account. In that case, the transaction fee is reduced to $2.50; you will still pay a 5 cents per share commission. Tanger pays all fees when you reinvest your dividends.

When you go to sell your shares in the plan, you’ll pay a transaction fee of $15 and a commission of 12 cents per share.

Helpful Links

Tanger Factory Outlet Centers’ Investor Relations Website

Current quote and financial summary for Tanger Factory Outlet Centers (finviz.com)

Information on the direct purchase and dividend reinvestment plans for Tanger Factory Outlet Centers

 

 

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