Simon Property Group Seeing Rising Store Vacancies
Simon Property Group
just reported that its funds from operations (FFO) jumped 11% to $463.9 million, or $1.61 a share, from $418.7 million, or $1.46 a share, in the year-ago period.
The company is a leading operator of regional malls and other retail properties. In this last quarter, average mall rent rose 6.3% to $39.26 per square foot, while rent in the outlet centers rose 6.6% to $27.12 per square foot. Occupancy fell at both its malls and outlet centers, as sales slowed from the year-ago quarter time period.
Management expects full-year FFO in the range of $6.40 to $6.45 a share, while the street consensus is for $6.40 a share.
We had removed shares of SPG from our "Recommended" list back on July 28 when shares were trading at $90.59. The company has a 5.37% dividend yield, based on Friday's closing stock price of $67.03. The REIT sector is getting more interesting from a yield perspective, but we believe the stock prices may have more work to do on the downside.
The consumer spending slowdown puts a big emphasis on Simon Property Group's business, so we are very cautious when it comes to retail-based REITS at this point. The company appears to have solid support in the $47-$56 price range, so we would look at those levels for any potential second looks. We'll keep investors posted.
Simon Property Group is not recommended at this time, holding a Dividend.com Rating of 3.2 out of 5 stars.
Sysco Sees Food Inflation in Results
just reported that its first-quarter profit rose 4% to $276.8 million, or 46 cents per share, in the three months that ended Sept. 27. That compares with $267 million, or 43 cents per share, a year ago.
The food distribution giant, which delivers food and other supplies to restaurants, cafeterias and other food service outlets, said food cost inflation, as estimated by its change in cost of goods, was 8% in the quarter.
Management sees a challenging environment persisting into the next quarter but feels the company is well positioned to weather the storm and for the long term.
We had removed shares of Sysco from our "Recommended" list back on Oct. 6, when shares traded at $29.72. The company has a dividend yield of $3.36%, based on Friday's closing stock price of $29.72. The stock is trading near seven-year lows right now, and it appears there may be support at the $20 level, but below that is a big gap toward the $13-$14 level. We think the shares offer a flat risk/reward right now, and we would look for a better entry point.
Sysco is not recommended at this time, holding a Dividend.com Rating of 3.4 out of 5 stars.
DryShips Changes Strategy to Lock In Revenue
just reported its third-quarter net income rose 71% to $180 million, or $4.21 a share, up from $105.3 million, or $2.97 a share, earned in the same period during 2007.
The company, which hauls dry bulk commodities like iron ore and coal, has changed its chartering strategy by employing its vessels in long-term charter contracts that provides revenue stability. This will prove to be a smart move going forward in the event pricing power continues the road it has been going down over the last few months.
We have been avoiding shares of DRYS since our early June coverage began, and the stock was trading at $89.93. The company has a dividend yield of 4.16%, based on Friday's closing stock price of $19.25. The stock made quite a run from May of 2006 when shares traded as low as $9 to highs one year ago of $123.50. We will be watching the volatile shares closely, as there may be some short-term opportunities that will pop up.
Dryships is not recommended at this time, holding a Dividend.com Rating of 2.6 out of 5 stars.
Nicor Gets Hit Hard on Natural Gas Price Spike
just reported its quarterly profit spiraled more than 91%, as the company was hurt by higher natural gas prices and operating expenses.
The jump in natural gas prices during the quarter contributed to higher revenue but also fueled higher operating expenses, including gas distribution costs, which grew 26% to $431 million. It will be interesting to see how the company now that gas prices have dropped pretty dramatically toward the end of the quarter.
The company still believes it will hit an EPS range of between $2.20 and $2.40 in 2008. The consensus estimates are for $2.36.
We had removed shares of GAS from our "Recommended" list back on Oct. 10, when shares traded at $39.20. The stock is now trading higher than those levels and we are putting it on our upgrade watch-list and will monitor the news very closely in the event we had prematurely downgraded it. The company has a dividend yield of 4.03%, based on Friday's closing stock price of $46.21.
Nicor is not recommended at this time, holding a Dividend.com Rating of 3.4 out of 5 stars.
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At the time of publication, the author had no positions in stocks mentioned, although positions may change at any time.
Tom Reese and Paul Rubillo are senior editors of Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.