Plum Creek Timber Co. (PCL), a Seattle-based timber real estate investment trust (:REIT), has recently declared a dividend of 42 cents per share for the first quarter of 2012. The dividend is payable in cash on May 31, 2012, to the shareholders of record as of May 18, 2012.
The revenue generated from sale of Plum Creek’s timber is considered as a long-term gain and the dividend payment is expected to be categorized as a long-term capital income gain. In addition, for most of the U.S. taxpayers, the dividend is projected to be taxable at a maximum rate of 15%.
A steady dividend payout reflects the long-term strategy of Plum Creek to provide attractive risk-adjusted returns to its stockholders. Investors looking for high dividend yields are increasingly favoring REITs. Solid dividend payouts are arguably the biggest enticement for REIT investors as the U.S. law requires REITs to distribute 90% of their annual taxable income in the form of dividends to shareholders.
Founded in 1989, Plum Creek is the largest and most geographically diverse private landowner in the United States. It owns approximately 6.6 million acres of timberlands in major timber producing regions of the United States. Additionally, the company also has interests in mineral extraction and natural gas production, communication, and transportation.
The company also boasts a strong and dedicated management team, which is one of the most respected and accomplished in the industry. Plum Creek benefits from the reputation and relationships of its key personnel with the industry as a whole, which further help in attracting profitable business and investment opportunities.
Plum creek is fully dedicated toward its goal of extracting high quality natural resources without hampering the environment, providing quality product and services to customers and enhancing value of its shareholders through effective capital allocations.
We maintain our long term ‘Neutral’ recommendation on Plum creek, which currently has a Zacks #3 Rank that translates into a short-term ‘Hold’ rating. We have a long term ‘Outperform’ recommendation and Zacks #1 Rank (Strong Buy) for Rayonier Inc. (RYN), one of the competitors of Plum Creek.
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