Dividends4Life: REIT Dividends: A Beacon For The Fiscal Cliff

REIT Dividends: A Beacon For The Fiscal Cliff

Posted by D4L | Thursday, January 03, 2013 | 1 comments »

Unlike traditional stocks, REITs derive their intrinsic value (of the underlying business) more on the value of the income stream or dividends paid. Because Real Estate Investment Trusts (REITs) distribute (by law) at least 90 percent of their taxable income to shareholders annually in the form of dividends, investors are becoming increasingly attracted to the notion of balancing a portfolio with steady and reliable dividend income.

In the more literal sense, REITs have become fortresses (smart in Latin) for dividend investors. With the pending expiration of the Bush Tax Cuts at the end of this calendar year, REIT investor income and other taxable dividends will come into tax parity (assuming congress makes no further changes to these rules) and both revert to being taxed at ordinary income rates in 2013. If demand for tax preferred qualifying dividends were to shift partly over to REITs as this tax advantage is removed, that increased demand should be a tail wind for REIT share values.

Source: Forbes

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1 comments

  1. Brett @ wstreetstocks // January 3, 2013 at 10:39 AM

    Have you looked at HCP? The stock is my favorite REIT and it is yielding 4.5% currently.

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