Kimco Realty: A Reliable Shopping-Center REIT Providing A 5.1% Yield

Core Viewpoint - Kimco Realty Corporation is a well-managed real estate investment trust (REIT) benefiting from strong rental rate growth and high occupancy in its grocery-anchored open-air shopping center portfolio [2][4][17] Portfolio and Occupancy - The REIT's portfolio is primarily located in urban centers with strong population growth and high household incomes, generating 86% of its annualized base rent from Coastal and Sun Belt markets [4][6] - As of December 31, 2023, Kimco Realty's occupancy rate reached 96.2%, nearing its pre-pandemic high of 96.4% [6][9] Financial Performance - In 4Q-23, Kimco Realty reported $239.4 million in funds from operations (FFO), a 2% increase year-over-year, with earnings of $0.39 per share [13][14] - The REIT raised its regular dividend to $0.24 per share and paid a special dividend of $0.09 per share, resulting in a FFO-based dividend payout ratio of 62% [14][15] Rental Growth - The rent per square foot increased by 3.4% year-over-year in 2023, reaching a new high of $20.32, supported by the REIT's strategic focus on grocery-anchored properties in economically vibrant markets [10][17] - The ability to raise rental rates has been a key driver of net operating income (NOI) growth, contributing to the stability of the dividend payout ratio [9][10] Valuation and Investment Thesis - Kimco Realty's stock is currently trading at a FFO multiple of 12.2x, with potential for re-rating to 15x, implying an intrinsic value of $23 per share [15][17] - The REIT offers a competitive yield of 5.1%, making it an attractive option for passive income investors [15][17]