About two weeks ago I told you that my favorite investment right now is high-quality, dividend-paying stocks. And I offered up Spanish telecom giant, Telefonica (NYSE: TEF), as a compelling opportunity, particularly given the volatility in the eurozone.
But with increasing chatter that the United States is headed for another recession – yesterday, the world's largest bond fund manager, Bill Gross, shared his fears about U.S. economic growth – it's time to provide you with another solid income play.
Why? Because I'm convinced that most investors are overreacting, fleeing for safety in cash and U.S. Treasuries. And that's just not necessary.
Even if the United States heads for another recession, more profitable and safe investments exist – ones like Tanger Factory Outlet Centers (NYSE: SKT).
A Retail Stock We Can Bank On
Structured as a Real Estate Investment Trust (REIT), Tanger pioneered the concept of the retail outlet shopping center in 1981. Today, it owns 38 outlet centers in 25 states. And more than 175 million shoppers visit its centers annually to get discounts on wares from popular retailers, including The Gap, Adidas, Nike, Polo Ralph Lauren, Coach, Kenneth Cole and Carter's.
I know. The retail sector isn't exactly the first one that comes to mind as a safe haven during a possible economic downturn. After all, consumer spending makes up more than 40% of U.S. GDP. But any such weakness actually plays right into Tanger's hands.
You see, high unemployment brings out the penny-pincher in all of us. And no one can match Tanger in terms of providing a one-stop shop for bargain hunters.
A quick look at the company's results proves the resiliency of Tanger's business model.
In the last year, tenants reported comparable sales growth of 4.6%. Even more impressive, tenants have enjoyed average annual sales growth of 3% since 1995. (Keep in mind, that timeframe includes two recessions.)
Here's a full rundown on the rest of the fundamentals that make Tanger a safe income investment in this market…
- Geographic Diversification. Tanger is not heavily exposed to any single state or major metropolitan area.