How Risky Is Simon Property Group's Dividend?
In something of an understatement, David Simon, CEO of Simon Property Group (NYSE: SPG), described 2020 as "difficult" in the company's fourth-quarter earnings release. He later used the term "unprecedented," which is a little more appropriate given the hit the mall-focused real estate investment trust (REIT) endured from the coronavirus pandemic and the efforts to slow its spread.
Still, income investors worried that the landlord's generous yield around 5% is too risky might want to take a deeper look. Things are better than they appear.
There was no question that Simon Property Group's 2020 financial results would make for difficult reading. Early on in the pandemic, malls were shut down by the government as a way to keep people from congregating and potentially spreading COVID-19. With malls shut, some retailers decided to stop paying rent, leading to expensive lawsuits and negotiations. And even now that malls have largely reopened, shopping hasn't gone back to normal, and vacancies have risen thanks to bankruptcies and troubled stores shutting locations. That's just a high-level summary of what was a year from -- well, a not very nice place filled with fire and brimstone.
Source Fool.com
