Kimco’s (KIM) dividend has been increased by a solid 5.9%.
Kimco is a self-managed equity real estate trust (REIT). It owns and operates neighborhood and community shopping centers primarily in North America including such tenants as TJ Maxx and Bed Bath & Beyond (BBBY, Financial). Kimco has paid dividends consecutively for 23 years.
The quarterly dividend for the January payment will be 27 cents versus the prior-year rate of 25.5 cents per share. The overall yield is 4.10%, above that of the Standard & Poor's 500. It currently ranks third within the large-cap REIT Retail firms.
Kimco is a compelling REIT with solid dividend growth of 7.5% annually over the past six years. It also released third-quarter financial results. Its funds from operations (FFO) was 38 cents a share, 2 cents above the same period last year.
REITs are best evaluated by analyzing FFO trends. On the revenue front, its income from rental properties dropped 1.4% from the same quarter last year. Much of this was due to the loss of the Sports Authority, which went bankrupt. Occupancy, a major component in evaluating REITs, was just over 95%.
Kimco continues on the path of fulfilling its 2020 Vision, in which $151 million of property sales were made bringing the 2016 total sales close to $1 billion. This includes existing Canadian operations.
Kimco continues to maintain one of the higher credit ratings in the retail REIT space with a solid BBB+ rating. It currently has $170.5 million of cash on the balance sheet. The REIT firm reduced guidance for FFO for calendar year 2016 at a $1.31 midpoint versus $1.37. REITs were separated from financial stocks in August and are now their own unique sector.The firm does not qualify as a member of our Top 100 Dividend Stock List (see below).
- Kimco Realty is currently priced at $26.61. The new dividend of 27 cents will be paid at the new higher rate on Jan. 17, 2017, to shareholders of record at close of business on Jan. 3, 2017. Listed in the table below are the quarterly dividend payments since 2010.
| Date | Quarterly dividend |
| Jan. 3, 2017 | 27 cents |
| Oct. 3 | 25.5 cents |
| July 1 | 25.5 cents |
| April 1 | 25.5 cents |
| Dec. 30, 2015 | 25.5 cents |
| Oct. 1, 2015 | 24 cents |
| July 1, 2015 | 24 cents |
| April 1, 2015 | 24 cents |
| Dec. 30, 2014 | 24 cents |
| Oct. 1, 2014 | 22.5 cents |
| July 1, 2014 | 22.5 cents |
| April 1, 2014 | 22.5 cents |
| Oct. 1, 2013 | 21 cents |
| July 1, 2013 | 21 cents |
| April 1, 2013 | 21 cents |
| Dec. 28, 2012 | 21 cents |
| Oct. 1, 2012 | 19 cents |
| July 2, 2012 | 19 cents |
| April 2, 2012 | 19 cents |
| Dec. 30, 2011 | 19 cents |
| Oct. 3, 2011 | 18 cents |
| July 1, 2011 | 18 cents |
| April 1, 2011 | 18 cents |
| Dec. 30, 2010 | 18 cents |
| Oct. 1, 2010 | 16 cents |
| June 29, 2010 | 16 cents |
| March 31, 2010 | 16 cents |
Analysis of Kimco Realty is based upon our five key criteria for the Top 100 list, which include:
| Category | Value | Score |
| Dividend Yield | 4.10% | 63 |
| Dividend Growth (3-6 year average) | 6.7% | 278 |
| Forward P/E | 15.92 | 122 |
| S&P Financial Rating | BBB+ | 160 |
| Beta | 0.95 | 125 |
| Total Score | 748 |
Additional information
| % Yield | 3 Year Div. Growth Rate | 6 Year Div. Growth Rate | FFO 2016 | P/FFO Ratio | 10 yr P/FFO Low | 10 yr P/FFO High | 5 yr max Yield % | 5 yr lowest Yield % |
| 4.10% | 5.9% | 7.5% | 1.50 | 17.74 | 8.89 | 24.25 | 4.77% | 3.17% |
Final analysis
Positives
- Kimco’s dividend yield is above that of the S&P 500 Index.
- Kimco maintains a three-year dividend growth rate of 5.9%.
- Kimco has paid out a dividend consecutively for the past 23 years.
- Kimco is trading at a modest forward price-earnings (P/E) ratio, below the market.
- Kimco maintains a beta of 0.95, lower than the average company.
- Kimco’s current dividend yield (4.10%) is above its five-year average historical dividend yield of 3.97% but below its maximum yield of 4.77% from November 2011.
- Kimco maintains a credit rating of BBB+. This is at the lowest category of investment grade.
Negative
- The stock price has doubled since 2012 as investors seek higher-yielding securities. Its FFO has risen from $1.23 to $1.50 over the same time period. Its current P/FFO is over 17, closer to its all-time high than low. As the stock is trading well above its average historical price/funds from operation (P/FFO) ratio, Kimco is overvalued.
Better candidates within the REIT space include Public Storage (PSA, Financial) and Ventas (VTR, Financial), which both rate higher (total score example) and are listed as Top 100 dividend companies.
Disclosure: I have no position in Kimco or Public Storage. I have a position in Ventas.
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