Will These Popular REITs And Real Estate Company Cut Dividends In 2012?

By Kathleen Martin REITs have been in favor with dividend investors seeking income. In particular, favorable tax treatment makes REITs more desirable because of the requirement that 90% of income must be paid to trust unitholders. Investors know that management cannot withhold cash that must be paid through distributions by law. For this very reason, I suggest that sophisticated investors consider investing in REITs. I decided to take a look at the yield sustainability of a few of the most popular real estate companies. Please use my research as a starting point for your due diligence. Annaly Capital Management Inc.’s (NLY) principal business is to generate net income for distribution to investors from its investment securities and from dividends it receives from its subsidiaries. Annaly owns mortgage backed securities that are guaranteed by Ginnie Mae, Freddie Mac and Fannie Mae. These three government agencies provide guarantees to groups of mortgages and sell them as low risk bonds, similar to treasuries. Annaly mitigates market risk through its various subsidiaries which hold, trade and clear in the securities that represent its capital distributions. Annaly trades on the New York Stock Exchange at around $17 per share. The year low is $14.05. The…