Is Macerich the Dividend Stock for You?

By The Motley Fool9 days ago


The mall real estate investment trust (REIT) sector got hit hard by the coronavirus pandemic. Even companies like Macerich (NYSE: MAC) that own malls in good locations weren't spared. As the world looks to move past COVID-19 with new vaccines, is now the time to buy this mall REIT, which yields almost 5%? Read this before you do.

Where 5% falls

When you look at the mall REIT sector, there are basically just three companies that still pay dividends: Macerich, with its 4.9% yield; factory outlet center specialist Tanger Factory Outlet Centers at 4.4%; and industry giant Simon Property Group, at 4.5%. By comparison, the S&P 500 Index yields roughly 1.5%, and the average REIT, using the Vanguard Real Estate Index ETF as a proxy, yields 3.8%.

Image source: Getty Images.

In 2020, when governments around the world closed non-essential businesses in an attempt to slow the spread of the coronavirus, Macerich cut its dividend twice. In the second quarter, it took the dividend from $0.75 per share to $0.50, with a portion paid in stock. Then in the third quarter, it went to an all-cash dividend of $0.15 per share, for a total reduction of 80%.

Macerich's rivals didn't fare any better. Tanger suspended its dividend altogether in Q3 until bringing it back at half its previous level in early 2021. Simon delayed its second-quarter dividend in 2020, but eventually paid it at about 40% below the first-quarter dividend. Others left investors in even worse shape -- CBL & Associates and Penn REIT ended up filing for bankruptcy.

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