Those payments, which rewarded shareholders for strong corporate performance, notably changed the shares’ income profile. Without those payments, the shares offer only a middling dividend yield. Based on the company’s history, it seems reasonable to expect a return of the annual special dividend at some point. Until then, however, income investors are better off owning a higher yielding REIT.
Even if a special annual dividend is returned, relying on such an irregular and conditional payout is a notable risk that probably isn’t worth it for investors who are trying to live off of their dividend income.
In the REIT space, yield matters. That’s particularly true since income is basically the intended focus of the REIT structure. While there is nothing wrong with a growth focused REIT, income investors should avoid such fare—and that includes even the well-run companies above.
The article Three REITs to Avoid originally appeared on Fool.com.
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