Investors Still Hating on Kimco Preferreds

While we continue working on our database we get the chance to look at charts as we run through various security pages and today we noticed that investors still hate the Kimco Realty (NYSE:KIM) preferreds.  At this rate they may be a buy in the not distant future. KIM is an investment grade retail focused REIT.

In the normal flow of preferred pricing the shares are marked down on the ex-dividend date and generally the share price will ‘base’ and then shortly thereafter start to move gradually higher.  NOT true in the case of the Kimco Realty 5.25% Cumulative Redeemable preferred (NYSE:KIM-M).

As you can see the shares were trading at $22.34/share the day before ex-date.  On the ex-date they were marked down by the amount of the dividend (32.8 cents) which should have meant an opening price of around $22 and then a day or two of fluctuation followed by a slow climb higher.

In this case the shares have now fallen for the 4th consecutive day and closed at $21.55/share today.  Current yield is 6.08% which for an investment grade preferred isn’t too far away from being a decent buy.

While the current yield is getting better it also goes to show what higher interest rates, a low coupon and being in a hated sector (retail related REITs) will get you.  The other Kimco Realty preferreds look just as sickly.

6 thoughts on “Investors Still Hating on Kimco Preferreds”

  1. This is a perfect example of buying too low of a yield based on rating…Their debt level isnt as pretty as things suggest. 5% perpetuals are a text book math example of what not to buy. It takes a $4 rear kicking to get it to 6%…My AILLL has always been above 6%…It hasnt dropped an inch this year…Infact it is too high now….Issues like AHT-D are the relative rock stars in this environment. Market doesnt know what to do with an 8.45% par that has had 3 partial calls on it… I bought more today at $25.19 after flipping half of them at 25.35 earlier this week. This thing will be at $25.60 come exD date again. Market isnt giving a freebee dividend.

    1. And if we get higher long term rates these KIMCO shares will be at $16 (or some such number).

  2. people have been piling into pfds since late in the QE cycle in the push out for yield thinking they were “safe”.. well maybe safe but not impervious to serious downdrafts.. and if some of those ETFs and other products start disgorging pfds like they did REITs and MLPs, no matter the underlying fundamentals, look out below… of course that is the best time to buy!

    another trade headline post closing, futures off massively again.. then the jobs and inflation news in the AM.. plus the macro of quantitative tightening that Tim has been pointing out.. not a great time to jump into income.. glad I am sitting out for a while to reassess.

    1. Hi Bea–I noticed those futures last night and thought they might reverse overnight–but not so much. Guess the 10 year will get some support again today.

  3. A great yield for IG paper. Only concern with some of these is the call date may no longer be meaningful in an up rate market. I suspect a lot of folks “looking forward” to call dates in the years to come will as disappointed as they are when everyone forgets their birthday. …sitting there with their birthday hat – but no party, and no call. And if a new higher coupon preferred is issued and the older issue is not retired…ouch. On the other hand – wow these are looking well-priced.

    1. Hi Alpha – As I read on Seeking Alpha either authors or commentor’s have continuously talked about ‘call protection’—no one that owns these low coupon IG preferreds has to have a concern with call dates–they are what they are named ‘perpetual’.

      At this price these shares are tempting–but my own forecast of 3.25% on the 10 year by year end means these could be much tastier in December.

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