Curtis Pride wrote:But a REIT isn't a company, and company's dividends don't fluctuate with income. If a company issues a $1.30 dividend, it's highly unlikely they'll lower that dividend. For if they do, it's a pretty bad sign of distress and many in Wall St. will run away from them.
Hell, I remember when I was a broker in '03 and AT&T had a 7% dividend yield and it was notable. A 14% yield would bring the house down.
REITs can be and are publicly traded companies. The same payout rules govern REITs regardless of public listing status. The point here is that they are REITs for tax classification purposes. They don't necessarily have to own office buildings or strip malls or whatever; many have huge MBS portfolios with scant physical property investments, several swap transactions, structured finance investments, and bond and loan investments. Many specialty finance REITs are under pressure and may have to cut dividends for various reasons. NFI already has. DFR has a large dividend yield as do KFN and NCT. The risk profile of these companies is considerably different than that of AT&T.