Increasing Dividend Yield Part II: REITs
This is the second installment in a multi-part series that looks at various options used by income investors to boost their yield while waiting for dividend growth to lift their portfolio’s overall yield-on-cost. Last week we looked at generating sufficient cash to fund their operating expenses, including normal capital replacements (except for UHT). For a company to consistently raise its dividend, it must generate cash flows sufficient to meet operating obligations and to service outstanding debt. Since a REIT is legally required to pay out 90% of its earnings, it is less likely to eliminate its dividend, but it could drastically cut the dividend in the face of persistent weak earnings (like any company).
Similar to the utilities mentioned last week, I purchased some REITs many years ago, but I won’t be rushing to add to increase my positions.
Full Disclosure: No position in the aforementioned securities.
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Published at Tue, 16 Nov 2021 00:00:00 -0800
