What is the relationship between AFFO and dividend? I understand dividend is about taxable income (90%). How to explain the fact that AFFO of NRF is 1.71 but the dividend was less than half? was it just because of taxable loss carry over? or there were some other things? In theory can dividend be roughly 90% of AFFO if there is no carryover?
In the case of carryover, how long is NRF going to take to use them all?
NRF is getting below 8%. There are so many other higher dividend stocks out there. But the pps seems to be ignoring gravity? Not sure if we should take some profit. if NRF has the intrinsic capability of paying out, say 1.5/year, then we should definitely hold. On the other hand there was no insider buy recently.
I hopw someone can be nice to answer such "naive" questions? Thanks in advance.
There is no relationship between affo and the dividend. AFFO is dominated by the VIEs where the assets of each respective vie can only be used to satisfy liabilities of that vie. Next is #$%$ gaap accounting, especially in the vies where non-cash accretion of discounts increases interest income, which increases affo, then mark to market adjustments on the same securities which have been net writedowns do not decrease affo. I wrote on this extensively after the acquisition of the CSE cdo. AFFO = pure baloney.
I know a chunk of their income is due to bond accretion which is non-cash (until the bond is paid off). In that case, its more of a timing issue of the taxable income and when it is realized. Another chunk of the AFFO has to do with depreciation expenses being backed off since for tax purposes depreciation reduces taxable income (relatively small here based on the mix of business lines). That is why you'll see quite a few equity REITS with negative EPS, but they are still paying a sizable dividend.