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Maybe4Less
3 Comments
Acuant Signals Acquisition on the Horizon
Nintendo Needs To Reach Out to Shareholders
CapitalSource Can't Cover Its Dividend
To be fair, CSE is classified as a mortgage REIT, but that is not the nuts and bolts of the operation. Most of their business is making loans to mid-sized companies.
At some point (I think a few years ago), they bought a few mortgages and had themselves classified as a REIT in an attempt to obtain tax-exempt status. Clearly this is not working so well as much of their dividends were actually returns of capital and their effective tax rate was over 30%, but that does not mean their business is not doing well. Their loan business seems to be doing fine and whether or not those distributions are dividends or returns of capital is irrelevant to me. I just love the current monster yield.
In short, the title is disingenuous, as CSE CAN cover the dividend, they just can't do it from tax-exempt income.