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Kimco Realty: I No Longer Recommend This 6.3%-Yielding REIT Based On Valuation

Published Mon, 11 Feb 2019 16:18:45 -0500 on Seeking Alpha

Kimco Realty Corp.'s (KIM) shares have rebounded strongly from the December market rout, and, as a result, I no longer recommend the REIT for new income investors. Though I like the REIT's overall value proposition in terms of portfolio and distribution coverage, the valuation has become a bit stretched lately, which translates into an unattractive risk/reward ratio for income investors. I'd wait for a drop before gobbling up some more shares.
Core Investment Thesis Remains Intact But Valuation Is No Longer Attractive For New Investors
This article serves as a valuation update for a previous recommendation I have made with respect to Kimco Realty Corp.
I last covered Kimco Realty Corp. at the end of December 2018 in my article titled, "Kimco Realty Corporation: Smart DGI Investors Can Still Buy The Drop" in which I recommended the commercial property REIT to high-yield investors at a price of $15. I recommended the commercial property REIT to income investors for four reasons, specifically:
Kimco Realty Corp. had and continues to have strong diversification stats which reduces cash flow and dividend adjustment risks; While lots of department stores and retailers struggled or went out of business altogether in the last couple of years - think of J.C. Penney (JCP), Sears (SHLD) or Toys 'R' Us - Kimco Realty Corp.’s lease portfolio actually held up quite well. Kimco Realty Corp. was, in fact, only marginally affected by store closures in the retail industry; Kimco... Read more