Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Kimco Realty in Focus
Based in Jericho, Kimco Realty (KIM) is in the Finance sector, and so far this year, shares have seen a price change of -11.14%. Currently paying a dividend of $0.25 per share, the company has a dividend yield of 4.8%. In comparison, the REIT and Equity Trust - Retail industry's yield is 4.28%, while the S&P 500's yield is 1.56%.
Looking at dividend growth, the company's current annualized dividend of $1 is up 3.1% from last year. Kimco Realty has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 15.31%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Kimco Realty's current payout ratio is 59%. This means it paid out 59% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for KIM for this fiscal year. The Zacks Consensus Estimate for 2025 is $1.73 per share, representing a year-over-year earnings growth rate of 4.85%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, KIM is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Kimco Realty Corporation (KIM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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