Taubman Centers Inc. ( TCO ), a real estate investment trust (REIT), has recently increased its dividend payout by 2.9% to a quarterly payment of $0.45 per share or $1.80 on an annualized basis. The dividend is payable on December 30, 2011 to shareholders of record as on December 19, 2011.
Since its initial public offering in 1992, Taubman Centers has never reduced its common dividend, while increasing the same on 14 occasions. A steady dividend payout facilitates the long-term strategy of Taubman Centers to provide attractive risk-adjusted returns to its stockholders.
Investors looking for high dividend yields are increasingly favoring REITs like Taubman Centers. Solid dividend payouts are arguably the biggest enticement for REIT investors as the U.S. law requires REITs to distribute 90% of their annual taxable income in the form of dividends to shareholders.
Taubman Centers has one of the strongest balance sheets in the sector with adequate liquidity. The debt-to-market capitalization stood at 38.7% by the end of third quarter 2011, with $21.6 million of cash and cash equivalents.
Taubman Centers has also taken prudent steps to reduce operating expenses by pruning its pre-development spending in the U.S. and Asia, as well as significantly reducing its overall workforce. This, in turn, has improved the bottom line of the company.
Taubman Centers owns, develops, acquires and operates regional and super-regional shopping centers throughout the U.S. and Asia. Retail shopping centers spanning over 400,000 square feet of gross leaseable area (GLA) are generally referred to as regional shopping centers, while those with GLA in excess of 800,000 square feet are called super-regional shopping centers. A large number of these shopping centers are strategically located in major metropolitan areas, including Los Angeles, San Francisco, Denver, Detroit, Phoenix, Miami, Dallas, Tampa, Orlando and Washington DC.
Taubman Centers has a strong portfolio of the best-in-class retail malls that generate the highest average sales per square foot in the country. Consequently, the company is relatively better placed than most of its peers to withstand the challenges of the macroeconomic environment.
We maintain our 'Neutral' recommendation on Taubman Centers, which presently has a Zacks #3 Rank that translates into a short-term 'Hold' rating. We also have a 'Neutral' recommendation and a Zacks #3 Rank for Equity One Inc. (EQY) , one of the peers of Taubman Centers.