Should Kimco Realty Stock Be Retained in Your Portfolio Now?

Kimco Realty (KIM) is well-positioned to gain from its grocery-anchored portfolio of premium retail properties in high-growth areas, 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.

Last month, Kimco reported first-quarter 2025 funds from operations (FFO) per share of 44 cents, which outpaced the Zacks Consensus Estimate of 42 cents. The metric grew 12.8% from the year-ago quarter. Results reflected better-than-expected growth in revenues, though a rise in interest expenses acted as a dampener.

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. Particularly, 82% of the annual base rent (ABR) comes from its top major metro markets.In addition, its top coastal markets have superior trade area demographics, exceeding the U.S. average by 21% for the median household income. Amid these, the company continues to see positive year-over-year traffic increases, both on a quarterly and yearly basis.

With a well-located and largely grocery-anchored portfolio that offers essential goods and services, this retail REIT is witnessing healthy leasing activity. In the first quarter of 2025, Kimco executed 583 leases, aggregating 4.4 million square feet in its consolidated operating portfolio, of which 439 were renewals and options and 144 were new leases. Given the necessity-driven nature of Kimco’s grocery-anchored portfolio, it is likely to continue witnessing healthy leasing activity in the upcoming period.

Kimco has a well-diversified tenant base led by a healthy mix of essential, necessity-based tenants and omnichannel retailers. National/regional tenants accounted for 82% of Kimco’s pro rata ABR as of the end of the first quarter of 2025. Given the strength of its retailers and developed omnichannel presence, Kimco is likely to witness stable cash flows.

Kimco has been making efforts to bolster its financial strength. This retail REIT exited the first quarter of 2025 with $2 billion of immediate liquidity. Kimco’s consolidated weighted average debt maturity profile was 8.2 years, and the company’s unencumbered properties represent around 94.8% of its portfolio as of March 31, 2025. The strong balance sheet allows it 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 nine times, with a five-year annualized dividend growth rate of 15.31%. These efforts to increase the dividend reaffirm investors’ confidence in the stock. Check Kimco’s Dividend History.

Shares of this retail REIT, carrying a Zacks Rank #3 (Hold), have declined 1.6%, narrower than the industry’s fall of 5.7% over the past three months. Analysts seem bullish on this retail REIT, with the Zacks Consensus Estimate for its 2025 FFO being revised a cent northward over the past month to $1.72.

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 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. The company has a substantial debt burden, and its total consolidated debt as of March 31, 2025, was around $8.02 billion. In the first quarter of 2025, interest expenses were up 7.8% year over year to $80.4 million.

Stocks to Consider

Some better-ranked stocks from the broader REIT sector are W.P. Carey WPC and Cousins Properties CUZ, each carrying a Zacks Rank of #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for W.P. Carey’s full-year FFO per share is pegged at $4.88, which indicates an increase of 3.8% from the year-ago period.

The Zacks Consensus Estimate for CUZ’s 2025 FFO per share is pegged at $2.79, which implies year-over-year growth of 3.7%.

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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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research