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Here's Why You Should Hold On To Kimco (KIM) Stock for Now

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Kimco Realty Corp. KIM enjoys the ownership of high-quality assets concentrated in the top 20 major metro markets, which offer several growth levers. The REIT has achieved significant diversification, with respect to geography and tenants, which will likely support its cash flows.

The decision to acquire Weingarten Realty Investors for $3.87 billion seems a strategic fit as it will strengthen Kimco’s portfolio with high-quality assets in the growing Sun Bet markets. The deal is projected to be immediately accretive to the key earnings metrics, while deleveraging the balance sheet.

In these uncertain times, having a grocery component has been the saving grace of retail REITs, with Kimco being backed by a well-located and largely grocery-anchored portfolio. Hence, the retail REIT enjoys a decent leasing activity and its rent-collection figures remain healthy.

Kimco’s emphasis on mixed-use assets clustered in the strong economic metropolitan statistical areas act as a tailwind.

Apart from these, the REIT has been making concerted efforts to bolster its financial flexibility to sustain the challenging environment. At the end of first-quarter 2021, it had $2.3 billion of immediate liquidity, with nearly $254 million in cash and cash equivalents, and $2 billion available under its unsecured revolving credit facility.

Kimco currently carries a Zacks Rank #3 (Hold). The stock has gained 34.7%, outperforming its industry’s rally of 28.4% in the past six months. In addition to that, the recent trend in estimate revisions indicates a bullish stance as the Zacks Consensus Estimate for both 2021 and 2022 funds from operations per share has witnessed a marginal upward revision over the past month. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Several retail REITs, including Kimco, Simon Property Group SPG, Macerich MACand Federal Realty FRT, have been battling store closure and bankruptcy issues because of lower footfall due to social-distancing requirements and higher e-commerce adoption amid the coronavirus crisis.

After the temporary suspension of dividends on its common shares, Kimco has reinstated the same. However, the figures are way down from the pre-pandemic period. As dividend payouts remain the biggest attraction for REIT investors, this puts the company in a disadvantageous position.

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Simon Property Group, Inc. (SPG) : Free Stock Analysis Report

Kimco Realty Corporation (KIM) : Free Stock Analysis Report

Macerich Company The (MAC) : Free Stock Analysis Report

Federal Realty Investment Trust (FRT) : Free Stock Analysis Report

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