It's been a disappointing month for shareholders of Scentre Group Ltd (ASX: SCG) which has dropped by 6% to now be trading at $3.30. However, it is still sitting in positive territory since its inception into the market in late June with the shares up 7.3% in that time.
While much of the market's attention is on the US and UK focused Westfield Corp Ltd (ASX: WFD), Scentre Group is also shaping up as an attractive prospect. Here are three reasons why the stock appears to be a reasonable buy today.
1. Yield. Although the market seems to have cooled on the big four banks, the hunt for yield is still as hot as ever with interest rates stuck at just 2.5%. Although its dividends aren't franked, the stock currently yields just over 6% which certainly beats the returns from term deposits or other "risk-free" asset classes.
2. Consumer confidence. The low interest rates will also help to boost consumer and business confidence, over time, which will drive overall sales and rental income higher.
3. Development. Scentre Group has currently forecast a development pipeline of between $1.5 billion and $2 billion over the next three years, but analysts at Morgan Stanley believe it has the capacity to double that figure to around $4 billion which would help improve earnings. Scentre Group is reportedly exploring the possibility of selling stakes in a number of its shopping centres, including nine NZ centres, and the money could be redirected into strengthening its most popular malls.
An even better bet than Scentre Group
Although Scentre Group is looking like a reasonable prospect, there is an even better stock for you to consider buying today.
