We came across a bullish thesis on Simon Property Group, Inc. (SPG) on Substacks by David. In this article, we will summarize the bulls’ thesis on SPG. Simon Property Group, Inc. (SPG)’s share was trading at $148.05 as of April 16th. SPG’s trailing and forward P/E were 20.39 and 25.06 respectively according to Yahoo Finance.
View of a mall entrance, showcasing the retail experiences offered by the company’s REIT.
Simon Property Group (SPG) presents a compelling case for long-term investors seeking income and stability, particularly in uncertain economic environments. While REITs are generally limited in their ability to repurchase shares due to their dividend obligations, SPG stands out by maintaining a disciplined capital structure, minimal share dilution, and occasional buybacks. Unlike many REITs that routinely issue equity to fund growth, diluting shareholders in the process, SPG finances its developments and acquisitions more conservatively. The company’s commitment to returning capital through a growing dividend—rather than frequent stock issuance—highlights its shareholder-friendly approach. Over time, SPG’s rising dividends have translated into substantial yield-on-cost for long-term holders. For example, an investor who bought shares in 2010 would now be enjoying an 11.5% yield on their original investment. The relationship between dividend growth and share price appreciation underscores SPG’s stable trajectory; as income rises, so does investor confidence, narrowing the gap between market price and intrinsic value.
SPG’s financial strength further enhances its appeal. The company generates robust free cash flow—approximately $3 billion annually—which vastly exceeds its interest obligations and comfortably covers upcoming debt maturities. Even in a worst-case scenario where refinancing becomes unavailable, SPG’s free cash flow and tangible asset base provide a formidable buffer against financial distress. This balance sheet prudence allows the company to navigate external shocks—like the COVID crash or a potential trade war—with confidence. Moreover, SPG’s portfolio of luxury tenants, including brands owned by Kering, LVMH, Tapestry, and Capri Holdings, positions it uniquely. These brands attract affluent, price-insensitive consumers, insulating SPG from macroeconomic risks like tariffs or inflation that might otherwise harm more price-sensitive retailers.
SPG’s strategic involvement in retail operations adds another layer of resilience. Its joint ownership of J.C. Penney—now part of Catalyst Brands alongside Aéropostale, Brooks Brothers, Eddie Bauer, and more—enables SPG to exert greater control over its tenant mix and mall traffic. While REIT tax rules restrict income diversification, SPG has adeptly leveraged these partnerships without jeopardizing its REIT status. Growth remains grounded in real estate development and acquisitions, but with an innovative edge. Anchor tenants like Macy’s and new ventures like Catalyst Brands bolster foot traffic, fortify occupancy rates, and protect long-term cash flows. With a current dividend yield of 5.7%, low debt risk, and strategic tenant alignment, SPG offers investors a rare blend of yield, safety, and upside—particularly appealing during market dislocations where dividend yield spikes offer entry points with asymmetric risk/reward.
Simon Property Group, Inc. (SPG) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 40 hedge fund portfolios held SPG at the end of the fourth quarter which was 48 in the previous quarter. While we acknowledge the risk and potential of SPG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SPG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.