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.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.What’s Aiding KIM Stock?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.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.Shares of this REIT, carrying a Zacks Rank #3 (Hold), have risen 5.1%, outperforming the industry’s growth of 1.2% in the past year.Image Source: Zacks Investment ResearchWhat’s Hurting KIM Stock?The market is witnessing a shift in retail shopping from brick-and-mortar stores to Internet sales. Particularly, the efforts of online retailers in recent years to go deeper into the grocery business have emerged as a concern for retail REITs like Kimco.Kimco faces competition from several real estate companies and developers who compete with the company for leasing space in shopping centers for tenants. This may affect Kimco’s ability to raise rental rates, including renewal rates and fill up vacancies.Despite the Federal Reserve announcing rate cuts recently, the interest rate is still high and is a concern for Kimco. The company has a substantial debt of around $8.3 billion as of Sept. 30, 2024. Our estimate indicates a year-over-year increase of 21.5% in interest expenses in 2024.Stocks to ConsiderSome better-ranked stocks from the retail REIT sector are Regency Centers REG and Tanger Inc. SKT, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Regency Centers’ 2025 FFO per share has been raised marginally over the past month to $4.49.The Zacks Consensus Estimate for Tanger Inc.’s 2025 FFO per share has been raised marginally over the past month to $2.23.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Kimco Realty Corporation (KIM): Free Stock Analysis Report Regency Centers Corporation (REG): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks