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What Is The Payout Ratio Of A REIT?

The payout ratio of a Real Estate Investment Trust (REIT) is a financial metric that measures the percentage of the REIT’s earnings that are distributed to shareholders as dividends.

In general, REITs are required by law to distribute at least 90% of their taxable income to shareholders in the form of dividends, which means that their payout ratio is usually quite high. However, the actual payout ratio can vary depending on the specific REIT and its financial performance.

To calculate the payout ratio of a REIT, you would divide the total dividends paid by the REIT over a given period (usually a year) by its net income over the same period. The resulting percentage is the payout ratio. For example, if a REIT paid out $2 per share in dividends over the course of a year and had a net income of $2.50 per share during the same period, its payout ratio would be 80% ($2 divided by $2.50).