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Here's Why You Should Retain Kimco Realty Stock in Your Portfolio Now
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Kimco Realty (KIM - Free Report) 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 is a key concern for Kimco. High-interest expenses add to its woes.
Shares of this retail REIT, carrying a Zacks Rank #3 (Hold), have gained 8.7%, outperforming the industry’s growth of 3.4% in the past year. Analysts seem bullish on this retail REIT, with the Zacks Consensus Estimate for its 2025 and 2026 funds from operations (FFO) being revised marginally northward over the past month to $1.71 and $1.77, respectively.
Image Source: Zacks Investment Research
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 2024, rent per square foot witnessed a CAGR of 3.1%. We project same-property net operating income to increase 17% year over year in 2025.
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 1,556 leases, aggregating 10.3 million square feet in its consolidated operating portfolio in 2024, of which 1,125 were renewals and options, and 431 were new leases. In the fourth quarter of 2024, Kimco witnessed 56 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 2025, we estimate a year-over-year increase of 3.5% in the company’s net revenues from rental properties.
Kimco has been making efforts to bolster its financial strength. This retail REIT exited the fourth quarter of 2024 with $2.7 billion of immediate liquidity. The company’s consolidated weighted average debt maturity profile is 8.0 years. Its unencumbered properties represent around 91% of its portfolio. 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, it announced a 4.2% increase in the dividend to 25 cents per share from 24 cents paid out earlier. In the last five years, this retail REIT has increased its dividend eight times, with a five-year annualized dividend growth rate of 10.68%. These efforts to increase the dividend reaffirm investors’ confidence in the stock. Check Kimco’s Dividend History.
What’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. This may affect the company’s ability to raise rental rates, including renewal rates and fill up vacancies.
Despite the Federal Reserve announcing rate cuts in the second half of 2024, the interest rate is still high and is a concern for Kimco. Elevated rates imply high borrowing costs for the company, which would affect its ability to purchase or develop real estate.
In fact, the company has a substantial debt burden, and its total consolidated debt as of Dec. 31, 2024, was around $8.46 billion. Our estimate indicates a year-over-year increase of 4.4% in interest expenses in 2025.
The Zacks Consensus Estimate for Regency Centers’ 2025 FFO per share has been raised by four cents over the past month to $4.54.
The Zacks Consensus Estimate for Tanger’s 2025 FFO per share has been raised by three cents over the past month to $2.26.
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.
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Here's Why You Should Retain Kimco Realty Stock in Your Portfolio Now
Kimco Realty (KIM - Free Report) 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 is a key concern for Kimco. High-interest expenses add to its woes.
Shares of this retail REIT, carrying a Zacks Rank #3 (Hold), have gained 8.7%, outperforming the industry’s growth of 3.4% in the past year. Analysts seem bullish on this retail REIT, with the Zacks Consensus Estimate for its 2025 and 2026 funds from operations (FFO) being revised marginally northward over the past month to $1.71 and $1.77, respectively.
Image Source: Zacks Investment Research
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 2024, rent per square foot witnessed a CAGR of 3.1%. We project same-property net operating income to increase 17% year over year in 2025.
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 1,556 leases, aggregating 10.3 million square feet in its consolidated operating portfolio in 2024, of which 1,125 were renewals and options, and 431 were new leases. In the fourth quarter of 2024, Kimco witnessed 56 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 2025, we estimate a year-over-year increase of 3.5% in the company’s net revenues from rental properties.
Kimco has been making efforts to bolster its financial strength. This retail REIT exited the fourth quarter of 2024 with $2.7 billion of immediate liquidity. The company’s consolidated weighted average debt maturity profile is 8.0 years. Its unencumbered properties represent around 91% of its portfolio. 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, it announced a 4.2% increase in the dividend to 25 cents per share from 24 cents paid out earlier. In the last five years, this retail REIT has increased its dividend eight times, with a five-year annualized dividend growth rate of 10.68%. These efforts to increase the dividend reaffirm investors’ confidence in the stock. Check Kimco’s Dividend History.
What’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. This may affect the company’s ability to raise rental rates, including renewal rates and fill up vacancies.
Despite the Federal Reserve announcing rate cuts in the second half of 2024, the interest rate is still high and is a concern for Kimco. Elevated rates imply high borrowing costs for the company, which would affect its ability to purchase or develop real estate.
In fact, the company has a substantial debt burden, and its total consolidated debt as of Dec. 31, 2024, was around $8.46 billion. Our estimate indicates a year-over-year increase of 4.4% in interest expenses in 2025.
Stocks to Consider
Some better-ranked stocks from the retail REIT sector are Regency Centers (REG - Free Report) and Tanger Inc. (SKT - Free Report) , 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 by four cents over the past month to $4.54.
The Zacks Consensus Estimate for Tanger’s 2025 FFO per share has been raised by three cents over the past month to $2.26.
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.