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Cohen & Steers Reit and Preferr Message Board

  • ironroad45 ironroad45 Apr 8, 2008 9:05 AM Flag

    HIGHER percentage of Return of Capital is a dividend CUT

    Anyone care to dispute this fact; look at ZTR's chart to see over the years how ROC has eroded the stock price, BIF would be another chart that demostrates the lose of principle on share price with the ROC.

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    • I enjoy spending my 20 cent monthly distribution and freely admit I don't fully undertand the issues of return of capital. Since the dividend includes a large component of ROC, the NAV should be falling, but I see that the NAV on January 2 was $22.01, only 5 cents more than it is today.

      • 1 Reply to mansobravo
      • RNP is a fund that owns shares of preferred stock and REIT's. In other words, these are its assets. When these shares distribute cash to RNP, RNP, in turn, distributes the cash to its shareholders, which is us. Depending on the component of the cash received, it will be classified as a dividend or a return of capital. RNP's net asset value is dependent on the market value of the shares it owns which fluctuates with the market. Thus, the net asset value of RNP is only indirectly linked to the net asset value of the shares that it owns but is more directly linked to the market value of the shares it owns.

        Hope that helped.

    • ROC does not effect dividend. Twenty cent a month is the same regardless if it is income or all ROC.

      A higher ROC will lower the NAV of RNP as was evident by the drop in NAV after the capital gains distribution the end of last year.

      I think you are confusing dividend, or in this case a level distribution, with yield.

    • With your statement, I don't even know where to start!!

      REITs that own real estate generally have a ROC component in their dividends due to tax (actually e & P, but we will call it tax)depreciation. Depreciation reduces "taxable" income, thus, distributions in excess are deemed a return of capital. In reality, it has nothing to do with the earning power of the real estate or its fair market value. Owned real estate could be appreciating or depreciating dramatically and there would be no effect on the characterization of the dividend.

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