3 Cheap Dividend Stocks to Buy Right Now
Stocks broadly have taken a nasty tumble over the past year. However, even in that context, some stocks stand out for their lower valuations relative to their peers. Three dividend stocks that are trading at cheap values these days are Simon Property Group (NYSE: SPG), STAG Industrial (NYSE: STAG), and Camden Property Trust (NYSE: CPT). Here's why some Fool.com contributors believe that bargain-hunting investors should check out this trio.
Brent Nyitray (Simon Property Group): Simon Property Group operates high-end shopping malls and premium outlet malls. The real estate investment trust (REIT) also owns an 80% non-controlling interest in Taubman Centers and a stake in French retailer Klepierre. Simon is recognized as one of the best-run U.S. mall operators. It also is trading cheaply compared to some of its peers. The macroeconomic environment for retailers has remained healthy given the strength of the U.S. labor market. People have jobs, and are getting raises. This means good things for retailers and mall operators.
Last year, Simon earned funds from operations (FFO) of $11.95 per share. REITs like Simon use FFO in lieu of earnings per share as reported under generally accepted accounting principles (GAAP). This is because depreciation and amortization are big GAAP expenses, but they aren't actual cash charges. They are accounting conventions, not things that a company would need to write checks for. This means that GAAP net income tends to understate the cash-flow-generating capacity of a REIT. It also means that REITs may appear to trade at high price-to-earnings ratios. However, when you look at their price-to-FFO ratios, the multiples make much more sense.
Source Fool.com
