Here’s Why Should You Retain Kimco Realty Stock in Your Portfolio Now

Kimco Realty KIM is well positioned to gain from its portfolio of premium retail properties in high-growth areas, a focus on grocery-anchored centers, a diversified tenant base and balance sheet-strengthening efforts.

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However, higher e-commerce adoption and competition from several real estate companies and developers are key concerns for Kimco. High-interest expenses add to its woes.

Recently, Kimco acquired The Markets at Town Center in Jacksonville, FL, for $108 million. This premier asset of 254,000 square feet of space is located in North Florida’s most sought-after shopping district.

Analysts seem bullish on this retail REIT, with the Zacks Consensus Estimate for its 2025 funds from operations (FFO) being revised marginally northward over the past three months to $1.70.

Kimco is well positioned to gain from its portfolio of premium shopping centers in the drivable first-ring suburbs of the top major metropolitan Sunbelt and coastal markets, having several growth levers like high employment and strong spending power, aiding in rent growth momentum. From 2020 to the third quarter of 2024, rent per square foot witnessed a CAGR of 3.8%. We project same-property net operating income to increase 14.1% year over year in 2024.

With a well-located and largely grocery-anchored portfolio that offers essential goods and services, this retail REIT is witnessing healthy leasing activity. Kimco executed 1,205 leases, aggregating 8 million square feet in its consolidated operating portfolio in the first nine months of 2024. In the third quarter of 2024, Kimco witnessed 55 consecutive quarters of positive leasing spreads, indicating solid pricing power across its high-quality portfolio.

Kimco has a well-diversified tenant base led by a healthy mix of essential, necessity-based tenants and omni-channel retailers. Given the strength of its retailers and developed omnichannel presence, Kimco is likely to witness stable cash flows. For 2024, we estimate a year-over-year increase of 13.4% in the company’s net revenues from rental properties.

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Kimco has been making efforts to bolster its financial strength. The company exited the third quarter of 2024 with $2.8 billion in liquidity. Kimco’s consolidated weighted average debt maturity profile is 8.3 years, and the company’s unencumbered properties represent more than 90%. The strong balance sheet allows the company to borrow at a favorable rate.

Solid dividend payouts remain the biggest attraction for REIT investors, and Kimco has remained committed to that. Concurrent with its third-quarter 2024 earnings release, Kimco announced a 4.2% increase in its dividend. In the last five years, this retail REIT has increased its dividend eight times. These efforts to increase the dividend are encouraging and reaffirm investors’ confidence in the stock. Check Kimco’s Dividend History.

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