Are there securities where investors are always paid a specific percentage of the company's profits if profits have been made?

I know that some REITs are mandated to distribute minimum percentage of their profits as dividends. Are there any other securities that pay a fixed percentage of profits as dividends?

(original question, but low quality: Some basic questions)

  • They may exist but I have never come across a dividend based on profits. There are some preferred stocks whose dividend is floating (tied to LIBOR) and I suppose, eventually to SOFR. – Bob Baerker May 13 '20 at 14:10

Not for arbitrary corporations (meaning that companies cannot be "forced" to distribute their profits), but Master Limited Partnerships have a structure similar to what you're describing. They distribute most of their profits to unitholders in a way that's analogous to a dividend but with different tax treatment.

MLPs are limited to certain industries, and abut 2/3 of them are in the oil and gas midstream sector (gas pipelines/processing, oil transportation, etc.). They are typically companies that operate based on fixed fees, so they're not as exposed to fluctuations in commodity prices.

  • In Canada, "Income Trusts" serve a similar purpose as MLPs in the US. – Flux Jun 30 '20 at 2:06

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.