Hello!
So basically, as I’m sure everybody knows reits are required to pay 90% of their earnings as dividends.
Because of depreciation and a few other things, their net income tends to be a decent bit smaller than their adjusted cash from operations
As far as I can tell, the reit is required to pay the 90% based off its net income, let’s say which is $1.5Bn for example. Now if the reit had an AFFO of 3.5Bn, why would the reit decide to pay $1.8Bn in dividends when it could get away with paying $1.35Bn?
I don’t understand why a lot of them seemingly pay more than they need too when they could use this cash flow to finance themselves instead of taking debt or diluting more shares, are they just trying to make themselves look favourable to the market or something?
Ty for any help!
Leave a Reply