Safe Dividend Stocks for the Next Market Crash: Kimco Realty (KIM)
KIM Dividend Yield: 5%
5-year Annual Dividend Growth Rate: 7.2%
Kimco Realty Corp (NYSE:KIM) is America’s largest neighborhood and community shopping center REIT, with 534 properties representing 86 million square feet of leasable space in 35 states and Puerto Rico.
The company reported same-store NOI growth of 2.8% for 2016, which was dragged down 1.1% by the bankruptcy of Sports Authority. However, this temporary setback has created a buying opportunity.
After all, while that represented a large growth blow to the REIT, Kimco has several key growth catalysts going for it:
- KIM has an enormous growth pipeline of over $3 billion (to be completed by 2020) with expected cash yield returns of 8% to 13%.
- Thanks to more than $1 billion of asset sales in just the past year, Kimco’s portfolio of properties has never been stronger, with a vastly diversified number of stores anchored by strong retailers such as Wal-Mart Stores Inc (NYSE:WMT), Home Depot Inc (NYSE:HD) and Ross Stores, Inc. (NASDAQ:ROST).
- Re-leasing and making improvements to its properties is expected to drive same store NOI growth through 2020 of 4% to 6%.
Meanwhile, Kimco has spent the last six years being very conservative with debt. In fact, its balance sheet is now strong enough to tie it for the second strongest credit rating in its industry (BBB+). Along with more than $1.5 billion in present liquidity, Kimco is well situated to take advantage of its strong medium-term growth potential.
Combined with a low 68% FFO payout ratio, Kimco’s dividend is not just generous, but also secure. Better yet, the company should be able to generate long-term dividend growth of 6% to 7%.
As of this writing, Brian Bollinger did not hold a position in any of the aforementioned securities.