REIT Dividend Requirements Benefit Investors

March 6th, 2009

Many dividend-oriented stocks determine their dividend policies at the discretion of the board of directors.  Not so with a  REIT investment.  Unlike other private entities, REIT Dividends are governed by IRS rules which regulate the formation and governance of Real Estate Investment Trusts. 

These rules do not allow any discretion at the management level in terms of dividend policy.  All REITs are required by the IRS to pay out at least ninety percent of taxable earnings in the form of dividends.  This means that investors reap almost the entire benefit of the Real Estate Investments that make up the majority of most REIT portfolios.  Investors that want liquid exposure to real estate should closely examine the benefits of owning REITs, as they offer a number of benefits for passive real estate investors.

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