Broadstone Net Lease Announces Tax Treatment of 2023 Dividends
- None.
- None.
Insights
The allocation of dividends for tax purposes is a critical aspect for investors, particularly in real estate investment trusts (REITs) like Broadstone Net Lease, Inc. The classification of dividends into ordinary income, capital gains and return of capital affects the tax treatment of these distributions. Ordinary dividends are taxed at the individual's income tax rate, while long-term capital gains benefit from a lower tax rate. The return of capital is not immediately taxed; instead, it reduces the cost basis of the investment, potentially increasing the capital gains tax when the stock is sold.
It is also noteworthy that the capital gain distributions are entirely long-term, which is beneficial for shareholders as these are subject to a lower tax rate compared to short-term gains. The absence of 'One Year Amounts' and 'Three Year Amounts' under Section 1061 indicates that the carried interest rules, which often result in higher tax rates, do not apply here. This could make BNL's dividends more attractive to certain investors seeking tax-efficient income.
From a financial analysis perspective, the dividend distribution announcement by BNL provides insight into the company's ongoing ability to generate and distribute cash to shareholders. The consistency of the payment amounts and the inclusion of Section 199A dividends suggest that BNL is operating within a stable framework, potentially making it a reliable source of income for investors.
Investors often look at the dividend yield, which is calculated by annualizing the dividend payouts and dividing by the stock price. Given the consistency in BNL's distributions, the yield can be a significant factor in the stock's attractiveness. Moreover, the stability in the dividend payments can be indicative of BNL's operational health and management's confidence in the company's financial position.
Understanding the nuances of REIT distributions is essential for investors. REITs are required to distribute at least 90% of their taxable income to shareholders and these distributions are often a mix of ordinary income, capital gains and return of capital. The structure of these dividends can indicate how the REIT is performing in terms of its real estate operations and asset management.
The detailed breakdown of BNL's dividend components allows investors to assess the quality of earnings. A higher proportion of the distribution coming from ordinary dividends could suggest strong rental income, whereas a larger return of capital might imply that the company is not generating enough income from operations and is returning capital to maintain its dividend.
Furthermore, the unrecaptured Section 1250 gain relates to the depreciation recapture on sold properties, which can provide insights into the company's portfolio turnover and the nature of its real estate gains.
Common Stock – CUSIP number 11135E203
FORM 1099-DIV |
Box 1a |
Box 2a |
Box 2b |
Box 2f |
Box 3 |
Box 5 |
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Record Date |
Payment Date |
Distribution Per Share |
Ordinary Dividends |
Capital Gain Distributions (1) |
Unrecaptured Section 1250 Gain (2) |
Section 897 Capital Gain (3) |
Nondividend Distributions (4) |
Section 199A Dividends |
12/31/2022 |
01/13/2023 |
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03/31/2023 |
04/14/2023 |
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06/30/2023 |
07/14/2023 |
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09/30/2023 |
10/13/2023 |
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The 2023 Capital Gain Distributions are comprised entirely of long-term capital gains determined under Section 1231 of the Code, and are excluded from Section 1061 of the Code. Accordingly, for purposes of Section 1061 of the Code and Treasury Regulations thereunder, the Company makes the following disclosures: the “One Year Amounts Disclosure” and the “Three Year Amounts Disclosure” are each
$0 - Unrecaptured Section 1250 Gain is a subset of, and included in, the Capital Gain Distribution amounts (Box 2a).
- Section 897 Capital Gain is a subset of, and included in, the Capital Gain Distributions amounts (Box 2a).
- Return of Capital.
About Broadstone Net Lease, Inc.
BNL is an industrial-focused, diversified net lease REIT that acquires, owns, and manages primarily single-tenant commercial real estate properties that are net leased on a long-term basis to a diversified group of tenants. Utilizing an investment strategy underpinned by strong fundamental credit analysis and prudent real estate underwriting, as of September 30, 2023, BNL’s diversified portfolio consisted of 800 individual net leased commercial properties with 793 properties located in 44 U.S. states and seven properties located in four Canadian provinces across the industrial, healthcare, restaurant, retail, and office property types.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240119955574/en/
Company:
Brent Maedl
Director, Corporate Finance & Investor Relations
brent.maedl@broadstone.com
585.382.8507
Source: Broadstone Net Lease, Inc.
FAQ
What is the ticker symbol of Broadstone Net Lease, Inc.?
What is the purpose of the income tax allocation announcement?
What are the components of the 2023 common stock dividends?
What is the composition of the 2023 Capital Gain Distributions?
What is the 'One Year Amounts Disclosure' and the 'Three Year Amounts Disclosure'?
What is the significance of Return of Capital mentioned in the press release?
