Читать книгу The Intelligent REIT Investor Guide - Brad Thomas - Страница 17

Chapter 3 discusses the actual creation and evolution of REITs. For now, just understand that they pay out at least 90% of their pretax income to shareholders in the form of dividends. The result is typically higher dividends as a percentage of their free cash flows (FCF) and higher dividend yields to boot.

In addition, to stay compliant with the law, REITs usually have to increase their payouts as rents rise over time, historically resulting in steady dividend growth.

Some academics claim shareholders shouldn't care how much of a company's net income is paid out this way. But others argue that dividends really do matter with respect to shareholders’ total returns.

In September 2010, Barron's quoted Ed Clissold, an equity strategist at Ned Davis Research. His research showed that the S&P 500 had delivered average annual price appreciation of 4.92% since the end of 1929. But its average annual total return had been 9.16%. In other words, dividends provided approximately 46% of those total returns, indicating that they do indeed count. A lot. And we haven't seen any evidence of that principle changing in the last decade.

Another related benefit is that REIT shareholders can participate in income reinvestment plans, plowing their dividend income back into their holdings by buying additional shares. Or, should they so choose, they can invest it elsewhere or spend it on a vacation in Hawaii. Other shareholders don't have this advantage. They have to accept whatever decisions the board of directors puts in place in this regard.

Skeptics may point out that REITs’ featured dividend yields are often below those of many corporate bonds. However, bond interest payments don't increase, whereas the REIT industry has a long‐term track record of increasing dividends on a regular basis. The Great Recession and 2020–2021 Covid‐19 pandemic both interrupted that run, it's true. But over time, their dividend action has still proven to outpace inflationary forces.

Back to Cohen & Steers again: “Real estate has inherent inflation‐hedging qualities that we believe can help investors defend against erosion in buying power resulting from the rising cost of living.” This includes how an inflationary environment can restrain new developments by pushing up the price of everything from land to materials and labor. As a result, landlords are in a better position to raise rents.

The article also mentions this: “Many commercial leases even have explicit inflation links, with rent escalators tied to a published inflation rate. As a result, REITs have historically benefited from inflation surprises, contrasting with the adverse reaction from broad stocks and bonds.” Covid‐19 did halt inflation for a time, but the long‐term trend tells us that will change soon enough.

On a slightly separate note, there's also an intangible psychological benefit in seeing significant dividends roll in so consistently. Seeing a check come in for several hundred dollars every quarter – without the usual effort on your part – can provide substantial comfort … regardless of whether you intend to spend it or reinvest it.