REITs are required to pay out at least 90% of their taxable income to shareholders annually, and with some tenants unable to pay rent in a coming recession, there won’t be sufficient cash to pay dividends. REITs will then turn to their stock.
“I have little doubt that REITs will begin paying dividends largely in the form of their own stock,” says Robert Willens, a tax and accounting expert who runs an eponymous consultancy. “That happened during the previous financial crises, and it will almost certainly happen again.”