In fact, it is not just REITs. When all stocks are given to Dividend/distribution, the stock price will correspondingly decline.
For example, if REITs A’s current stock price is RM1, it declares a dividend of 2cent(RM) per unit, Ex-date 25th Dec 2020, and payment date 31st Jan 2021.
So on the Ex-date, which is 25th Dec 2020, the share price of REITs A will be reduced to RM0.98, and the 2cent dividend will be received as late as 31st Jan 2021.
So, isn’t there any profit from receiving dividends? Earn dividends and lose stock prices.
No, good REITs pay dividends and after the stock price pulls back, they will always fill the gap. Due to the stock price is cheaper and attracts more investors, so long-term holding to earn dividends is still feasible.
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