Where does Kimco Realty (KIM) rank after its 6% announced dividend increase?

kim

Summary: Kimco’s (NYSE: KIM) dividend was 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 like TJ Maxx and Bed Bath & Beyond.  Kimco has paid dividends consecutively for 23 years. The quarterly dividend for the January payment will be $0.27 versus the prior year rate of $0.255 per share. The overall yield is 4.10%, above that of the S&P 500. It currently ranks 3rd 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. The firm also released Q3 financial results. Its funds from operations ( or 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 a billion dollars. 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 of this year 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 Corp. is currently priced at $26.61. The new dividend of $0.27 will be paid at the new higher rate on January 17, 2017, to shareholders of record at close of business on January 3, 2017. Listed in the table below are the quarterly dividend payments since 2010.
Date Quarterly Dividend
1/3/2017 0.27
10/3/2016 0.255
7/1/2016 0.255
4/1/2016 0.255
12/30/2015 0.255
10/1/2015 0.24
7/1/2015 0.24
4/1/2015 0.24
12/30/2014 0.24
10/1/2014 0.225
7/1/2014 0.225
4/1/2014 0.225
10/1/2013 0.21
7/1/2013 0.21
4/1/2013 0.21
12/28/2012 0.21
10/1/2012 0.19
7/2/2012 0.19
4/2/2012 0.19
12/30/2011 0.19
10/3/2011 0.18
7/1/2011 0.18
4/1/2011 0.18
12/30/2010 0.18
10/1/2010 0.16
6/29/2010 0.16
3/31/2010 0.16

Analysis of Kimco Realty Corp. 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 avg) 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 3 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 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. 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) and Ventas (VTR). Kimco Realty Corp. (NYSE:KIM) does not qualify as one of our Top 100 Dividend Stocks.

Kimco Realty Corp. Dividend Yield Historical Chart (Click to enlarge) kim2

Chart Explanation:  Dividend growth stocks may be viewed undervalued when the current yield is above historical readings for the past 5 years. 

Further information on dividend investing and evaluating dividend growth candidates can be found at http://seekingalpha.com/author/timothy-mcintosh/articles

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