Kimco Realty (KIM) Could Be a Great Choice

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Kimco Realty in Focus

Headquartered in Jericho, Kimco Realty (KIM) is a Finance stock that has seen a price change of -10.84% so far this year. The real estate investment trust is paying out a dividend of $0.25 per share at the moment, with a dividend yield of 4.79% compared to the REIT and Equity Trust - Retail industry's yield of 4.41% and the S&P 500's yield of 1.62%.

Taking a look at the company's dividend growth, its current annualized dividend of $1 is up 3.1% from last year. In the past five-year period, Kimco Realty has increased its dividend 4 times on a year-over-year basis 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.

KIM is expecting earnings to expand this fiscal year as well. 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.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. 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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This article originally published on Zacks Investment Research (zacks.com).

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