Is It Safe? Vornado's Hidden Dividend Cut

TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

People invest in real estate investment trusts to reap rich cash dividends. But Vornado Realty Trust(VNO Quote) shareholders haven't been so lucky lately.

In January, Vornado started paying 40% of its dividend in cash and the rest in stock to shore up its balance sheet. That means investors who previously received 95 cents a share in cash are getting 41.5 cents in cash and 53.5 cents of Vornado stock. The 12% drop in Vornado's stock this year has added to the sting, especially compared with the 2.1% gain of the S&P 500 Index.

...