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Douglas Emmett's 2024 Dividend Tax Treatment: What You Need to Know

Julian WestMonday, Jan 20, 2025 5:11 pm ET

3min read

As a Douglas Emmett (DEI) shareholder, you might be wondering about the tax treatment of the company's 2024 dividends. DEI has recently announced the tax details for its common stock dividends, which can help you plan your finances and understand the implications for your portfolio. Let's dive into the key points and what they mean for you.

1. Ordinary Income: The total ordinary income component of the 2024 dividends is $0.038. This means that shareholders will be taxed at their ordinary income tax rate on this portion of the dividend. For example, if a shareholder is in the 24% tax bracket, they would pay $0.00912 in taxes on the ordinary income portion of the dividend.
2. Capital Gains: There is no capital gains component in the 2024 dividends. This means that shareholders will not be subject to capital gains tax on the dividends they receive in 2024.
3. Return of Capital: The total return of capital component of the 2024 dividends is $0.722. This portion of the dividend is not taxed immediately. Instead, it reduces the shareholder's basis in the stock. For example, if a shareholder bought the stock at $20 per share, their basis would be reduced by $0.722 for each share they own. If the shareholder then sells the stock at a later date, the amount of capital gain they realize will be reduced by the amount of return of capital they received.
4. Section 199A Dividends: The total Section 199A dividend component of the 2024 dividends is $0.038. This portion of the dividend may qualify for a tax deduction under Section 199A of the Internal Revenue Code. The exact tax treatment of this portion of the dividend will depend on the shareholder's individual tax situation.

In summary, the 2024 tax treatment of Douglas Emmett's dividends will result in shareholders paying ordinary income tax on a small portion of the dividend, while the majority of the dividend will either reduce their basis in the stock or may qualify for a tax deduction under Section 199A. Shareholders will not be subject to capital gains tax on the 2024 dividends.

When comparing DEI's dividend yield to other REITs and income-focused investments, it's clear that DEI's 4.34% yield is competitive with other REITs and income-focused ETFs. For instance, the Vanguard Real Estate ETF (VNQ) has a dividend yield of approximately 3.5% as of January 2025, while the iShares Global REIT ETF (REET) has a dividend yield of around 4.5%. The Schwab U.S. REIT ETF (SCHH) has a dividend yield of approximately 3.8%. DEI's dividend yield is higher than these ETFs, making it an attractive option for income-focused investors.

In conclusion, understanding the tax treatment of Douglas Emmett's 2024 dividends is crucial for shareholders to plan their finances and maximize their returns. DEI's competitive dividend yield and tax-efficient distribution make it an attractive choice for income-focused investors. As always, it's essential to consult with a tax professional to determine the best course of action for your specific situation.

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