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How Did Industrial REITs Reward Shareholders in 2Q17?

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Why dividends are important to REITs

REITs (real estate investment trusts) usually give generous returns to shareholders because they have to distribute ~90% of their profits to investors in order to qualify as an REIT.

REITs fund shareholder returns with the help of the rent that they generate from tenants, and these returns usually come in the form of dividends or share buybacks, which aim to supply a constant flow of returns to investors.

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Prologis’s shareholder returns

While Prologis (PLD) had a dividend yield of ~3.54% in fiscal 2015 and 3.14% in fiscal 2016, PLD is expected to offer a dividend yield of 2.78% in fiscal 2017. Analysts expect the company to offer a yield of 2.86% over the NTM (next 12 months).

PLD paid a dividend per share of $0.44 in 2Q17, compared with $0.42 per share in 2Q16.

DCT dividend policy

DCT Investment Trust (DCT) offered dividend yields of 3% and 3.1% in fiscal 2015 and fiscal 2016, respectively. The company is expected to offer a yield of 2.2% in fiscal 2017.

DCT will pay a quarterly dividend of $0.31 per share on October 18, 2017, to shareholders of record as of October 6, 2017.

DRE’s dividend policy

Duke Realty (DRE) offered a dividend yield of 3.28% and 2.75% in fiscal 2015 and fiscal 2016, respectively. The company is expected to offer an NTM yield of 3.3% and ~4.6% in fiscal 2017.

DRE has announced that it will pay a quarterly dividend of $0.19 per share on August 31, 2017, to shareholders of record as of August 16, 2017.

Notably, these three REITs and Simon Property Group (SPG) make up ~12% of the Vanguard ETF (VNQ), which has a yield of ~4.4%.

In the next part, we’ll examine the valuation multiples of these three REIT stocks.

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