CareTrust REIT, Inc. Announces Tax Treatment of 2023 Dividends

Rhea-AI Summary

CareTrust REIT, Inc. (NYSE:CTRE) has reported the tax status of its 2023 dividends paid to shareholders. The dividends include ordinary dividends, qualified dividends, capital gains, unrecaptured section 1250 gains, and non-dividend distributions. The total amount of dividends paid is $1.3950, with 73.7018% classified as ordinary dividends and 26.2982% as unrecaptured section 1250 gains. Shareholders will receive an IRS Form 1099-DIV from Broadridge Corporate Issuer Solutions, the Company’s 2023 dividend paying agent, detailing the tax treatment of the dividends. The Company encourages shareholders to consult with their tax advisors regarding the federal, state, and local income tax consequences of these dividends.

Insights

Tax Advisor

From a tax perspective, the classification of dividends is crucial for shareholders as it determines the tax rate applied to each portion of the distribution. The reported 73.7018% ordinary dividends are taxed at the individual's income tax rate, which could be higher than the capital gains tax rate. The remaining 26.2982% classified as non-dividend distributions generally return capital to shareholders and reduce the cost basis of the investment, potentially deferring taxes until the sale of the stock. The absence of capital gains distributions indicates that the REIT did not realize significant capital gains from the sale of assets during the year, which may reflect a strategy focused on income generation rather than asset turnover.

Financial Analyst

For investors, the indication that CareTrust REIT's 2023 cash distributions exceeded its earnings and profits suggests that the company is distributing more than it earned, which could be a point of concern regarding the sustainability of future dividends. This practice can sometimes signal that a company is drawing from its reserves to meet dividend commitments. However, it is also common for REITs to have higher distributions due to depreciation, which is a non-cash expense that can reduce taxable income while not affecting cash flow. Investors should monitor the company's operational performance and cash flow generation to assess the long-term viability of its dividend policy.

REIT Analyst

As a Real Estate Investment Trust (REIT), CareTrust REIT is required to distribute at least 90% of its taxable income to shareholders in the form of dividends, which often results in high dividend yields. The 20% qualified business income deduction under section 199A can provide significant tax benefits for shareholders, as it effectively reduces the taxable portion of REIT dividends. This tax advantage is unique to REITs and certain other pass-through entities, making them attractive for income-focused investors. Nonetheless, the tax treatment and dividend sustainability are contingent on the REIT's ability to maintain stable rental income from its properties and manage its portfolio effectively.

SAN CLEMENTE, Calif.--(BUSINESS WIRE)-- CareTrust REIT, Inc. (NYSE:CTRE) reported today the tax status of its 2023 dividends paid to shareholders. Details on the classifications of the dividends are included in the table below:

DISTRIBUTIONS ON CARETRUST COMMON STOCK
										Box 1a		Box 1b		Box 2a		Box 2b		Box 3		Box 5
Record Date		Payment Date		Distribution Per Share			Taxable Distribution Per Share			Ordinary Dividend		Qualified Dividend (Included in Box 1a)		Capital Gain Distr.		Unrecap. Section 1250 Gain (Included in Box 2a)		Non-Dividend Distributions		Section 199A Dividend
12/30/22		01/13/23		$	0.2750		$	0.2750		73.7018%		0.0000%		0.0000%		0.0000%		26.2982%		73.7018%
03/31/23		04/14/23		$	0.2800		$	0.2800		73.7018%		0.0000%		0.0000%		0.0000%		26.2982%		73.7018%
06/30/23		07/14/23		$	0.2800		$	0.2800		73.7018%		0.0000%		0.0000%		0.0000%		26.2982%		73.7018%
09/29/23		10/13/23		$	0.2800		$	0.2800		73.7018%		0.0000%		0.0000%		0.0000%		26.2982%		73.7018%
12/29/23		01/12/24		$	0.2800		$	-	(1)	0.0000%		0.0000%		0.0000%		0.0000%		0.0000%		0.0000%
Total				$	1.3950		$	1.1150		73.7018%		0.0000%		0.0000%		0.0000%		26.2982%		73.7018%
(1) As the Company's aggregate 2023 cash distributions exceeded its 2023 earnings and profits, the January 2024 cash distribution declared in the fourth quarter of 2023 will be treated as a 2024 distribution for federal income tax purposes and not included on the 2023 Form 1099. If you were a stockholder of record as of December 29, 2023, $0.00 is reported on your 2023 Form 1099 and $0.28 will be reported on your 2024 Form 1099.

Shareholders of record of the Company’s common stock will receive an Internal Revenue Service Form 1099-DIV from Broadridge Corporate Issuer Solutions, the Company’s 2023 dividend paying agent. The form will report the dividends paid and the amounts designated as total ordinary dividends, qualified dividends, total capital gains, unrecaptured section 1250 gains, non-dividend distributions and dividends that may be eligible for the 20% qualified business income deduction under section 199A. If shares were held in “street name” during 2023, the IRS form will be provided by a bank, brokerage firm, or nominee. Because the Company’s tax return has not yet been filed for the year ended December 31, 2023, the dividend income tax allocations presented herein have been calculated using the best available information to date.

The tax treatment of these dividends by state and local authorities varies and may not be the same as the IRS’s treatment. Because federal and state tax laws affect individuals differently, the Company cannot advise shareholders on how dividends should be reported on their tax returns. The Company encourages shareholders to consult with their own tax advisors with respect to the federal, state and local income tax consequences of these dividends.

About CareTrust^TM

CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition, development and leasing of skilled nursing, seniors housing and other healthcare-related properties. With a nationwide portfolio of long-term net-leased properties, and a growing portfolio of quality operators leasing them, CareTrust REIT is pursuing both external and organic growth opportunities across the United States. More information about CareTrust REIT is available at www.caretrustreit.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240119194183/en/

CareTrust REIT, Inc., (949) 542-3130, ir@caretrustreit.com

Source: CareTrust REIT, Inc.

FAQ

What is the ticker symbol for CareTrust REIT, Inc.?

The ticker symbol for CareTrust REIT, Inc. is CTRE.

What are the classifications of the dividends reported by CareTrust REIT, Inc. for 2023?

The classifications of the dividends reported by CareTrust REIT, Inc. for 2023 include ordinary dividends, qualified dividends, capital gains, unrecaptured section 1250 gains, and non-dividend distributions.

How much were the total dividends paid by CareTrust REIT, Inc. for 2023?

The total amount of dividends paid by CareTrust REIT, Inc. for 2023 is $1.3950.

What percentage of the dividends is classified as ordinary dividends?

73.7018% of the dividends is classified as ordinary dividends.

Who will provide shareholders with the IRS Form 1099-DIV detailing the tax treatment of the dividends?

Shareholders will receive an IRS Form 1099-DIV from Broadridge Corporate Issuer Solutions, the Company’s 2023 dividend paying agent, detailing the tax treatment of the dividends.

What does CareTrust REIT, Inc. encourage shareholders to do regarding the tax consequences of the dividends?

CareTrust REIT, Inc. encourages shareholders to consult with their own tax advisors regarding the federal, state, and local income tax consequences of these dividends.