Better Dividend Stock: Simon Property Group vs. Federal Realty Investment Trust

Core Viewpoint - Real estate investment trusts (REITs) are attractive dividend stocks due to their stable rental income, which supports dividend payments and portfolio expansion [1] Group 1: Company Comparison - Simon Property Group (SPG) and Federal Realty Investment Trust (FRT) are two major retail-focused REITs that offer attractive and growing dividends [2] - Investors may prefer to hold only one retail REIT, prompting a comparison of which is the better dividend stock [2] Group 2: Property Portfolios - The quality and location of a REIT's property portfolio are crucial for sustainable and growing dividends [4] - Simon Property Group primarily invests in malls, owning 232 properties, including high-quality shopping and entertainment destinations [6] - Federal Realty focuses on high-quality open-air shopping centers and mixed-use properties in affluent suburban areas, attracting high-quality retailers [7] - Both REITs own high-quality properties that benefit from durable and growing demand [8] Group 3: Financial Profiles - Federal Realty has a slightly lower dividend payout ratio, while Simon Property has a higher bond rating, indicating strong financial profiles for both [10] Group 4: Dividend Histories - Federal Realty boasts an impressive 57 years of dividend increases, placing it among the elite Dividend Kings [11] - Simon Property has a less consistent dividend history, having cut its payout during the pandemic but has since returned to pre-pandemic levels [13] Group 5: Growth Profiles - Federal Realty anticipates 5% to 6.8% growth in funds from operations (FFO) per share this year, driven by rental increases and acquisitions [14] - Simon Property expects a lower FFO growth of 1.3% to 3.3%, benefiting from rent growth and new acquisitions [15] - Federal Realty's higher growth rate may lead to greater dividend growth and total returns [15] Group 6: Investment Recommendation - Both Federal Realty and Simon Property are solid dividend stocks due to their high-quality portfolios and financial profiles [16] - Federal Realty is highlighted as the superior choice, with a stronger dividend growth track record and expected faster earnings growth [16]