High Dividend Yield Stocks? - Part 2
Difference in dividend payout by REITs and Business Trusts
Business trusts and REITs are also allowed to pay distributions to investors out of operating cash flow. This is unlike companies, which can only pay dividends out of accounting profits.
That means even when REITs and business trusts are not really doing well, they can still pay out dividends from their operating cash flow to give an impression that they are profitable. Do open your eyes when you see your dividends.
What Does Operating Cash Flow - OCF Mean?
The cash generated from the operations of a company, generally defined as revenues less all operating expenses, but calculated through a series of adjustments to net income. The OCF can be found on the statement of cash flows.
Also known as "cash flow provided by operations" or "cash flow from operating activities".
One method of calculated OCF is: EBIT + Depreciation - Taxes
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