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Kimco (KIM) Raises Dividend to 16 Cents for Fourth Quarter

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Kimco Realty (KIM - Free Report) recently announced a quarterly cash dividend of 16 per share. This marks an increase from the 10 cents paid in the prior quarter. The dividend will be paid on Dec 23, to shareholders of record on Dec 9, 2020.

Along with the dividend announcement, the company noted that it has paid cash dividends aggregating 66 cents per share on its common shares in 2020, through third-quarter 2020. The latest dividend payment, along with the previous dividend payouts, will enable the company to meet Kimco’s taxable income distribution requirements for the current year, as presently estimated. The company further remains hopeful to establish a more normalized and well-covered dividend level in 2021.

Admittedly, solid dividend payouts remain the biggest attraction for REIT investors and Kimco has been committed to the same. However, on May 8, amid the coronavirus pandemic and related economic uncertainties, the company announced that the board has temporarily suspended the dividend on its common shares. This came amid the pandemic as the health crisis triggered stay-at-home mandates and shutdowns of retail properties, leading to store closures that significantly affected the rental collections of the retail landlords.

However, with the situation easing later on, in September, Kimco announced the reinstatement of dividend for the third quarter of 2020 and paid 10 cents per share. Although it reflected a decline of 64.3% from the prior payment, the dividend approval came as a relief for investors.

Notably, over the recent years, mall traffic has continued to suffer amid a rapid shift in customers’ shopping preferences and patterns with online purchases taking precedence. These have made retailers reconsider their footprint and eventually opt for store closures. Further, retailers unable to cope with competition are filing for bankruptcies.

This has emerged as a pressing concern for retail REITs like Kimco, as the trend is curtailing demand for the retail real estate space considerably. The situation has been further aggravated amid social-distancing requirements and higher e-commerce adoption due to the coronavirus crisis. The downside has significantly affected Macerich (MAC - Free Report) and Taubman Centers (TCO - Free Report) besides major players like Simon Property (SPG - Free Report) and Kimco.

Nevertheless, the reopening of the retail sector in several parts of the United States came as a breather as tenants now stand in a better position to generate revenues and make rent payments, thereby reducing pressure on retail landlords. At the end of October, all of Kimco’s shopping centers were open and operational with around 98% of tenants, based on the annualized base rent currently open, including some that are operating on a limited basis.

Moreover, in these uncertain times, having a grocery component has been the saving grace of retail REITs. And Kimco has a high-quality, mixed-use portfolio concentrated in the top U.S. markets and majority of its annual base rent comes from grocery-anchored centers.

Thus, with a well-located and largely grocery-anchored portfolio that offers essential goods and services, rent-collection figures are gradually improving. The company collected roughly 89% of the total pro-rata base rents billed for the third quarter and 90% for October. Given the continuation of this trend as well as Kimco’s decent balance-sheet strength, the company seems well poised to navigate through the challenging times and sustain its dividend payment.

This Zacks Rank #3 (Hold) stock has gained 33.1% in the past six months against its industry’s rally of 30.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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