Why did it take so long for Sears, one of the kings of retail, to fail?
Actually, it hasn't failed.
Sears stock may be worthless, but the stores are still around.
That's because they're evolving. If the department stores survive, it will be thanks to the effort of employees implementing changes fit for the current competition.
This type of evolution at Sears and other retailers has me absolutely giddy about owning the top REIT I'll show you today.
Sure, the retail sector is a mess. But that doesn't mean it will stay that way forever. And it doesn't mean we can find big profits in the sector either.
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Giant consulting firm McKinsey & Co. is opening a retail laboratory at the Mall of America in Minneapolis, Minn. The goal of this pop-up store is to test new ideas and technologies to better compete in today's market.
It's a brilliant move, and it bodes extremely well for shopping malls that require retailers to maintain a physical presence in a virtual world.
How will McKinsey do it?
Some of the ideas being tested by McKinsey include smart mirrors. They'll allow consumers to rapidly experience offerings in different colors or styles without having to run around the store grabbing items off the shelf.
Giant retailer Walmart Inc. (NYSE: WMT) has its own lab, where it's testing artificial intelligence software.
Not to be outdone, Bed Bath & Beyond Inc. (NASDAQ: BBBY) is opening several lab stores where it can test different products and layouts to best fit today's retail consumer.
There is huge money at stake for getting this next generation of retail right. You can see the direction things are moving.
The hybrid model that combines both online selling with brick-and-mortar locations will be a big winner for struggling shopping malls.
What will not happen is some sort of apocalyptic outcome where these giant retail spaces sit empty and idle.
Plus, many shopping centers are converting thousands and thousands of square feet into multipurpose community space. Many malls are turning into shared spaces with offices, health clinics, assisted living units, etc.
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The mall doomsday scenario is way, way overdone.
But that hasn't stopped the market from pummeling REITs focused on owning shopping malls.
As a result, the valuations are low, and dividends are high.
If you're a value investor looking for huge upside and a 9% dividend yield, then you have to be an investor in shopping mall REITs today.
Here's the top REIT in that space...
The Top REIT to Buy Now Will Pay a Whopping 9% Yield
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]My favorite shopping mall REIT to buy today is Tanger Factory Outlet Centers Inc. (NYSE: SKT).
Like most retail REITs, the stock has struggled mightily in 2019. It's down 24% so far this year.
While the cash flow at the company has been negatively impacted by a large number of store closings, these reductions are not disastrous.
In fact, it's unclear whether or not the lower cash flow at certain malls will translate to a reduction in the dividend at Tanger.
And right now, that dividend is a very lofty 9.1%.
Analysts expect Tanger to make $1.34 per share in 2019 before slipping to $0.83 per share in 2020.
There's no denying that's a significant drop, but there is still plenty of cash available to pay the dividend.
Even Sears pays its rent, and so too will retailers at Tanger outlets.
With shares trading for only 11 times 2019 earnings, shares of Tanger are dirt cheap. Investors on the hunt for dividends are buying stocks like Tanger at a rapid clip.
That buying often pushes valuations to well above 20 times earnings.
If we assume Tanger will make $0.83 per share next year as analysts expect, the stock trades for only 18 times earnings.
It's entirely possible that the company will do significantly better than the expected $0.83 per share.
The economy is being supported by an accommodative Federal Reserve. Lower interest rates will spur spending and increase consumer confidence.
Plus, incomes are increasing, and that means more retail spending.
If McKinsey figures out the ideal hybrid retail solution, more stores will be opening, replacing the stores that have closed in the last year or two.
That's how evolution works.
Successful investing works when the outlook for the future is bleak. It works even better when the "crowd" doesn't factor in what evolution will bring an industry.
That's the time to buy.
Robert Herjavec: Indisputable Proof That Anybody Can Get Rich Through Angel Investing
When Neil Patel launched the Angels & Entrepreneurs Summit, he had only planned to invite a small group of guests to join him and guest "Shark" Robert Herjavec... but then Neil revealed something truly shocking.
During this clip (about halfway through the event), he reveals indisputable proof that anybody can transform their life through angel investing.
We knew we had to show this event to everyone - the information is just too valuable to keep under wraps.