Weyerhaeuser (WY) Declares $5.6 Billion Special Dividend In Quest for REIT Status

Weyerhaeuser Co. (NYSE: WY) said Monday that it plans to pay out a special dividend to shareholders totaling $5.6 billion, which is a required step for the company's plan to become a real estate investment trust. The special dividend equal approximately $26.50 per share. The move caused a spike of more than 5 percent in the company's stock in early market movement Monday as investors position to capture the large payout. As one of the world's largest lumber and wood product companies, Weyerhaeuser has been pushed by investors for years to become an REIT to push down its income tax rate 35 percent. The trusts distribute 90 percent of their taxable income to shareholders at least as dividends each year, and then can subtract the dividends from taxable income. These types of companies often pay no corporate income taxes. "Today's announcement represents the final major step in executing our plan to convert to a REIT," said Dan Fulton, president and chief executive officer. "The REIT structure best supports our strategic direction and positions Weyerhaeuser for future growth. The tax efficiency of the REIT structure also will enable us to increase our timberland earnings and make higher distributions to our shareholders." The dividend is expected to be paid out on September 1, and will include the company's regular quarterly dividend of roughly $11 million. The payment will be made to shareholders of record as of July 22. Cash will be limited to 10 percent of the payout, or $560 million, with the rest being made in the form of stock. The company's board approved its conversion into a REIT in December, and its shareholders approved the change in April. Analysts at Goldman Sachs noted that the announcement is consistent with the company's previous announcements, but the timing the E&P disbursement comes a few months earlier than expected. The firm expect the announcement to be a positive for the stock, which has underperformed the S&P 500 greatly by declining 33% since April 23, 2010 versus an 11% slide in the S&P 500. They said the announcement removes any uncertainty about Weyerhaeuser's plans to convert to a REIT. Shares of Weyerhaeuser are up 5.19 percent to $37.75 in early market movement Monday.... Read more

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