If Congress enacts legislation to reduce the tax on corporate dividends, as the Bush administration and corporate lobbyists hope, real estate investment trusts would instantly lose some of their appeal. Many investors buy REIT stocks for their hefty dividends (by law the trusts must pay out 90 percent of their net income to shareholders). With an across-the-board tax cut on dividends, all kinds of companies would have an incentive to increase their own payout ratio, offering yield-hungry investors a much wider array of choices.
