2020 Will Be Another Year of Pain for Tanger
Tanger Factory Outlet Centers (NYSE: SKT) is one of the most heavily shorted stocks on Wall Street at the moment. A big piece of the negative sentiment is due to the fact that an ETF that owned a massive amount of Tanger shares has been forced to sell the stock due to a decline in the company's market cap. However, the ongoing changes in the retail sector are the real driving factor behind this event -- and the company just announced that 2020 will be another tough operating year. Here's what investors need to know.
Tanger's stock has lost roughly a third of its value over the past year. It is down by two-thirds from its 2016 highs. The dividend yield is a heady 10%, despite the fact that the real estate investment trust (REIT) has increased its dividend annually for 27 consecutive years and had a very reasonable funds from operations (FFO) payout ratio of around 62% in 2019 (FFO is like earnings for an industrial company). Notably, Tanger's balance sheet remains strong, with total debt to total adjusted assets at roughly 50%, well below the 60% required by its debt covenants. It also covers its interest costs by a solid 5.1 times, much higher than the 1.1 times debt covenant target. And it has a largely unused $600 million line of credit available to it if the need should arise.
But regardless of the positives and the deep stock decline that's already occurred, investors are still expecting trouble ahead.
Source Fool.com
