Why Is SL Green's Dividend So High?
When you see a stock with a high dividend yield, the first question to ask is whether that yield is too good to be true. But the answer can get a bit complicated if the stock also happened to be a real estate investment trust (REIT).
Because of how REITs are structured, they tend to have high dividends. A REIT is required to distribute the vast majority of its earnings to shareholders as dividends in order to qualify for special tax treatment. This allows these companies to avoid paying income tax at the corporate rate. It also means the dividends tend to naturally be higher, and not necessarily for a bad reason.
But given the current state of the economy and the rapid rise in interest rates we've seen over the past year, some REITs' dividend yields are raising concerns. REITs generally struggle in a rising rate environment, and office REITs get hit particularly hard.
Source Fool.com
