Dividend Payout Characteristics of U.K. Property Companies

Executive Summary. Employing panel data methodology, the dividend policy of property companies quoted on the London Stock Exchange is examined. Between 1986 and 1998, the quoted property sector paid out, on average, 44% of its net earnings as dividends. Similar to firms in other sectors, real estate corporations smooth their dividend payout to minimize the chance of having to reduce dividends in subsequent years. The empirical evidence further shows that the dividend payout ratio of the average real estate corporation is dictated to a large extent by the firm's total asset holding and leverage ratio. Property investment companies pay significantly higher dividends, compared to property trading companies.