The Rising Influence of Rising Affluence

[DewDiligence]

PCL—I understand that some of the operating activities qualify as REIT status, while others like the manufacturing do not. Is this why the dividend paid can remain consistent rather than fluctuating to be a particular % of income (as I thought REITs had to do)?

The taxable manufacturing operations are a very small part of PCL’s overall operations, so they have little effect on cash flow and dividend payments.

REIT’s do not have to maintain a constant dividend payout; rather, what they must do to maintain tax-exempt status is distribute at least 90% of GAAP net income to shareholders each fiscal year. Due to the way GAAP net income is defined for the harvesting of timber, PCL’s cash flow from operations typically exceeds GAAP net income by a wide margin, making the 90% threshold easy for PCL to satisfy.