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Highwoods Properties Inc. Message Board

  • mysportcraft mysportcraft Mar 24, 2011 11:19 AM Flag

    Earnings vs. Payout ????

    Im new.
    My question is this: If a company only makes .86 cents per share,.....and pays out 1.70 in dividends a year....

    How long can that stay-in-place.??

    How can a company Pay-Out so much $$, when their earnings are nowhere near the payout amounts.??

    (Yeah, they might be able to Borrow some money to float the dividend for awhile,.... but that doesn't seem like a bright idea.)

    Would someone explan to me how HIW keeps paying out such a large dividend compared to their earnings.??
    Thanks

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    • Reit's have lots of real estate depreciation which is a non cash reduction of earnings per share.

      When the depreciation is added back to earnings it's called funds from operations or free cash flow.

      As long a free cash flow exceeds the dividend, which it does, the company can sustain the payout.

 
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