Last update on 2024-06-27

Kimco Realty (KIM) - Dividend Analysis (Final Score: 5/8)

Analyze Kimco Realty's (KIM) dividend performance with our comprehensive 8-criteria scoring system. Discover insights on dividend yield, stability, and sustainability.

Short Analysis - Dividend Score: 5

We're running Kimco Realty (KIM) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Kimco Realty's (KIM) dividend performance was evaluated using an 8-criteria system. KIM's dividend yield of 4.7865% exceeds the industry average, making it attractive for income investors. However, its average payout ratio (-187.29%) and erratic dividends coverage by earnings indicate inconsistency and risk. The company has paid dividends for over 25 years, showcasing some financial stability, but lacks consistent stock repurchase practices, resulting in share dilution over the last two decades.

Insights for Value Investors Seeking Stable Income

Potential investors should be cautious. While KIM’s high dividend yield and long history of dividend payments are positives, its unstable payout ratios and inconsistent dividend coverage suggest potential risk. If you value steady income and financial stability, you may want to explore more stable options. However, if you're comfortable with some volatility and looking for higher yields, it might be worth considering.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price.

Kimco Realty's (KIM) dividend yield of 4.7865% surpasses the industry average of 4.15%, signifying a higher return on investment for dividend-focused investors. This trend can be attractive for income-seeking investors. Historically, KIM has maintained a competitive dividend yield compared to the industry. There were periods like 2008 and 2016-2018, where KIM's yield spiked significantly, reflecting both changes in dividend payouts and stock price fluctuations. With the stock price closing at $21.31 in 2023, the company has shown resilience and continued commitment to shareholder returns through dividends. Overall, KIM’s higher-than-average dividend yield can be seen as a positive indicator for potential and current investors focusing on income generation.

Average annual Growth Rate higher than 5% in the last 20 years?

Explain the criterion for Kimco Realty (KIM) and why it is important to consider

Criterion 1.1 focuses on the Dividend Growth Rate over the last 20 years and sets a threshold of 5% for assessment. A higher Dividend Growth Rate indicates a company's ability to continually increase its dividend payout, suggesting financial health and profitability. Investors often view consistent and growing dividends as a sign of a mature, stable company that provides reliable income streams. Therefore, this criterion is critical for evaluating the long-term sustainability and attractiveness of KIMGO Realty's (KIM) dividend policy.

Average annual Payout Ratio lower than 65% in the last 20 years?

The Payout Ratio indicates the percentage of earnings distributed as dividends. A ratio below 65% signifies a sustainable dividend payout.

The data for Kimco Realty (KIM) shows a highly inconsistent payout ratio over the last 20 years, with an average payout ratio of -187.29%. This calculation is skewed by negative earnings periods, such as -6371.68% in 2009. Apart from these extreme values, the payout ratios are vastly above the ideal threshold of 65% in most instances. This inconsistency suggests that Kimco Realty has struggled to maintain a sustainable dividend payout policy, making it a problematic trend for prospective dividend investors.

Dividends Well Covered by Earnings?

It is essential to determine if Kimco Realty's (KIM) dividends are well covered by its earnings since this indicates financial health and sustainable dividend payments.

Reviewing Kimco Realty's historical data on earnings per share (EPS) and dividends per share (DPS), the dividends coverage ratio fluctuates considerably over the past two decades. Specifically, from 2003 to 2023, the dividends covered by earnings varied, showing some concerning periods like 2009 (-63.72%) and 2020 (23.2%), indicating earnings were insufficient to cover the dividends. Years like 2021 (40.78%) and years in the mid-2000s like 2014 (133.79%) show better coverage. This trend portrays an unstable pattern, signaling potential risks for investors depending on dividends. More recent years like 2022 (410.36%) show high volatility, suggesting the need for cautious optimism. Such fluctuating coverage ratios imply Kimco Realty must stabilize its earnings to assure reliable payout ratios moving forward.

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow

Free cash flow coverage of dividends is vital to assessing a company's ability to sustain its dividend payments. It is calculated by dividing free cash flow by the total dividend payouts. A ratio higher than 1 indicates that the company generates more cash than it pays out in dividends, suggesting financial stability and the potential for dividend growth.

Stable Dividends Since the Company Began Paying Dividends?

Explain the criterion for Kimco Realty (KIM) and why it is important to consider

Stability in dividend payments, where the dividend per share did not drop by more than 20% over the past two decades, is of utmost importance for income-seeking investors.

Dividends Paid for Over 25 Years?

Examining whether a company has paid dividends consistently for over 25 years can offer insights into its financial stability and commitment to returning value to shareholders.

Kimco Realty (KIM) has a track record of paying dividends for 26 years, from 1998 to 2023. This consistency is a strong positive indicator for investors as it suggests financial robustness and a commitment to shareholder returns. Adjustments to the dividend, such as the sharp decrease during the 2008 financial crisis and the 2020 pandemic, reflect necessary measures to maintain the company's financial health. With dividends per share recovering and growing post-crisis and reaching $1.02 in 2023, it demonstrates a resilience and return to strength over time. Overall, this trend indicates a solid dividend policy, positioning Kimco Realty favorably within the market.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases indicate a company's confidence in its own financial health and growth prospects, and they can create value for shareholders by reducing the number of outstanding shares.

Kimco Realty (KIM) has experienced share repurchases in only a few select years out of the last 20 (notably, 2012, 2018, and 2019). The average number of shares repurchased over the last 20 years has been 5.7173 million. However, the overall trend shows a significant increase in the number of shares outstanding, rising from 217.88 million in 2003 to 616.95 million in 2023, which indicates dilution rather than consistent share repurchase activity. This data suggests that while there have been some buybacks, they haven't been reliable or consistent enough to offset share dilution over the long term, which is a negative indicator for shareholders looking for value creation through stock repurchases.