Simon Property Group: Why Its 4.80% Dividend Yield Is Attracting Income Investors

Simon Property Group offers a 4.80% dividend yield that is 144% covered by its 2025 FFO guidance, indicating strong financial support for the payout.

• A DCF model estimates the stock's intrinsic value at $261.65 per share, implying a 30.3% undervaluation compared to its current price of $182.

• Analysts at Morgan Stanley have raised their price target for Simon Property Group to $205 from $180, reflecting optimism about the company's performance and outlook.

• Simon's business model, driven by lease renewals at higher rents, generates consistent FFO growth without requiring new capital.

• Recent dividend increases and share repurchases signal confidence in the company's capital allocation strategy and financial stability.

Simon Property Group (SPG) has long been a cornerstone of the U.S. retail real estate landscape, and in 2026, it's drawing renewed investor attention for its combination of income generation and value potential. With a 4.80% dividend yield and strong coverage from its 2025 FFO guidance, SPG offers one of the more compelling income opportunities in the REIT sector. That yield isn't just a headline number—it's backed by fundamentals, with the company's funds from operations more than covering the dividend payout. For income-focused investors, that's a critical sign of stability.

Meanwhile, valuation metrics are also drawing attention. Analysts and investors are increasingly using DCF and P/E ratio models to assess SPG's intrinsic value and market positioning. A DCF model estimates the company's intrinsic value at $261.65, well above its current price of $182, suggesting a 30.3% undervaluation. At the same time, SPG's P/E ratio of 26.43x is below the industry average, reinforcing the idea that it may be overlooked relative to its peers.

What's driving this potential undervaluation? Much of it comes down to Simon's ability to grow its funds from operations without relying on external capital. Through high-quality real estate holdings—primarily A and A+ malls and Premium Outlets—Simon has consistently achieved 10-15% cash leasing spreads when renewing tenant leases. That means higher rents and, by extension, higher NOI and FFO. The compounding nature of this growth mechanism makes Simon's returns more predictable and repeatable, offering a model that's less reliant on market timing than many others.

Still, the company's appeal isn't just on the balance sheet. Simon has also taken action to return value to shareholders. In its most recent quarter, SPG increased its dividend by 5.6% and repurchased 1.27 million shares for $140 million. Analysts have taken note: Morgan Stanley has upgraded the stock and raised its price target to $205, signaling growing confidence in Simon's capital allocation strategy and long-term performance.

Why Is Simon Property Group (SPG) Attracting Income Investors in 2026?

Simon Property Group has consistently demonstrated a strong ability to maintain and grow its dividend yield, which currently stands at 4.80%. For income investors, the 144% coverage ratio from its 2025 FFO guidance is a key indicator that the company is well-positioned to maintain this payout, even in a challenging economic environment. The company's ability to consistently achieve high cash leasing spreads— ranging from 10% to 15% in recent quarters—further supports this view.

Moreover, Simon's business model is designed to compound growth over time. By focusing on renewing leases at higher rents, the company doesn't need to rely on new capital infusions to drive earnings growth. This makes Simon's earnings more predictable and stable, which is a key draw for investors who are looking for consistent income streams. The recent dividend increase of 5.6% and significant share repurchases also reinforce the company's commitment to shareholder returns.

Is Simon Property Group (SPG) Still Undervalued in 2026?

Analysts and investors are increasingly looking at Simon through the lens of intrinsic value and market positioning. A DCF analysis estimates Simon's intrinsic value at $261.65 per share, significantly higher than its current price of $182. This implies a 30.3% undervaluation, suggesting that the market may not yet be fully recognizing the company's long-term growth potential.

At the same time, Simon's P/E ratio of 26.43x is below the industry average of 27.19x, indicating that the stock is relatively cheap compared to its peers. This combination of valuation metrics—both from DCF and P/E—suggests that Simon may be entering a period where its market value catches up with its fundamentals. Analysts at Morgan Stanley have reflected this sentiment by raising their price target for SPG to $205, signaling a growing optimism about the company's outlook.

What's Next for Simon Property Group?

The next key focus for Simon will be how it continues to execute on its lease renewal strategy and how effectively it can convert those renewals into FFO growth. With a history of achieving 10-15% cash leasing spreads, the company is well-positioned to continue compounding its earnings and supporting its dividend. Additionally, as the broader retail sector evolves, Simon's ability to adapt and maintain its high occupancy rates and tenant quality will be important factors to monitor.

For now, the company's fundamentals remain strong, and with a dividend yield of 4.80% and improving valuation metrics, Simon Property Group offers a compelling option for investors looking to balance income generation with long-term value potential.

Summary of Key Insights

Simon Property Group's 4.80% dividend yield is well-supported by its 2025 FFO guidance, offering strong coverage and financial stability for income investors.

The company is currently undervalued based on both DCF and P/E ratio analysis, suggesting potential upside for investors who recognize its long-term growth potential.

Recent developments, including a 5.6% dividend increase and analyst upgrades, signal confidence in Simon's capital allocation strategy and performance.

Simon's ability to generate FFO through lease renewals at higher rents supports a predictable and repeatable growth model.

Analysts at Morgan Stanley have raised their price target for SPG to $205, reflecting a growing optimism about the company's outlook.

Sources

Simon Property Group: Not The Fattest Yield But One Of The Most Attractive: Seeking Alpha
Is Simon Property Group (SPG) Still Attractive After Strong Returns: Simply Wall Street
Morgan Stanley Raises Simon Property Price Target to $205 from $180: Marketscreener
Simon Property Group: Cash-Leasing-Spread: Yahoo Finance
Simon Property Group's Earnings Calls: Contradictions ...: AInvest
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: Cushman & Wakefield Expands Occupier Advisory Capabilities with Top Industrial Brokers Joe Howell and Brett Spitzer, Company Filing
: Morgan Stanley Upgraded Datadog and Appian to Overweight, Seeking Alpha
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: Morgan Stanley Upgraded Datadog and Appian to Overweight, Seeking Alpha
: U.S. Industrial Market Shows Renewed Momentum ... Cushman & Wakefield
: Is Simon Property Group (SPG) Still Attractive After Strong Performance?, Financial Media
: Simon Property Group: Not The Fattest Yield But One Of The Most Attractive, Financial Media
: Simon Property Group: Cash-Leasing-Spread, Financial Media
: Is Simon Property Group (SPG) Still Attractive After Strong Returns, Financial Media
: Morgan Stanley Raises Simon Property Price Target to $205 from $180, Marketscreener