Ever wonder what happened to a stock you sold years ago? Once upon a time I owned Kimco, a retail space REIT that focuses on strip malls, mostly anchored by grocery stores. The company paid a nice dividend and seemed well managed with a strong balance sheet.
I can’t even remember how many years ago I sold Kimco or even what my rationale was. I have a hazy memory of preferring the senior housing sector to retail. (I have both Senior Housing Trust and Wellpoint in my portfolio today.)
Turns out my decision may have been well timed. Since peaking at over 30 bucks a share in mid-60, Kimco’s shares have fallen. The woes of regional shopping malls has taken a toll on REIT’s exposed to retail real estate, despite the company’s moves to strengthen its portfolio and sharpen its focus on major urban markets.
But recently Kimco has made a bit of a comeback, with shares rising from about $13 to about $17 over the last 12 months. And get this, Kimco currently pays a dividend yield of 6.3%.
So I’m tempted to buy back into the stock.
Fundamentally, I believe Kimco’s real estate portfolio looks stronger than most retail portfolios.
Sure, there are risks — the biggest being an accelerated consumer move toward e-commerce shopping — but I think grocery stores and discount retailers will continue to drive walk in traffic to the kinds of open air shopping malls that dominate Kimco’s portfolio. And with occupancy rates north of 90%, Kimco isn’t one of those REITs saddled with empty storefronts. (Over 95% of its anchor-tenant spaces are occupied.)
Kimco has been revamping its portfolio in recent years, selling assets and concentrating its portfolio on 20 key urban areas across the country.
I’d be a buyer at the current price and dividend yield levels.
In fairness, at last week’s stock price ($17.75 Friday afternoon) was just above the average of analysts’ 12-month price target. So the dividend yield is the main incentive on this choice. In the near term, dividends will fuel the total return on Kimco holdings.
Dividend Pick of the Week 