📅 On This Day
Kelo Ruling Adds Sovereign Risk Premium to Real Estate Assets
On June 23, 2005, the Supreme Court ruled 5-4 in Kelo v. City of New London that governments could seize private property and transfer it to private developers for 'economic development.' For REIT holders and real estate equity investors, the decision was a quiet but lasting shock — it confirmed that income-producing commercial properties could be legally confiscated to boost local tax revenues. A sovereign risk premium on physical assets entered capital-return models that day and never left.
The ruling reminded income investors that even a deed in hand is no guarantee against government intervention.
🇺🇸 US
Source: Kelo v. City of New London, 545 U.S. 469 (2005); U.S. Supreme Court Official Records
🌍 Around the World
South Africa's Dividend Tax Hike Becomes Emerging-Market Cautionary Tale
South Africa abolished its corporate-level Secondary Tax on Companies in 2012, replacing it with a shareholder-level Dividend Withholding Tax at 15% — a cleaner system welcomed by investors. Then in 2017, with little warning, the government hiked the rate to 20% to close a widening budget deficit, instantly cutting net yields for both local and foreign shareholders. The episode has become a textbook illustration of 'regime risk': when a government urgently needs revenue, the withholding tax lever is rarely left untouched.
South Africa's DWT now sits at 20%, though treaty rates may apply for qualifying foreign investors.
🇿🇦 ZA
Source: SARS Dividends Tax guidance; Allan Gray new dividend withholding tax analysis
🔥 Dividend Streak
PPG Industries Turns Glass Pioneer Legacy Into 54-Year Dividend Streak
When PPG was founded in 1883 by Captain John Ford and John Pitcairn, American cities were still importing plate glass from Europe — and more than a dozen domestic manufacturers had already failed. PPG became the first financially successful U.S. plate-glass maker, later expanding into aerospace transparencies, laminated aircraft glass, and ballistic-resistant armor. That restless evolution has carried the materials giant to a 54-consecutive-year dividend increase streak, with raises dating back to 1972.
From ending America's glass import dependency to coating fighter jets — PPG has never stopped raising its dividend.
PPG — PPG Industries Inc
Source: encyclopedia.com; ppg.com/en-US/about
🔥 Dividend Streak
PPG Industries Turns Glass Pioneer Legacy Into 54-Year Dividend Streak
When PPG was founded in 1883 by Captain John Ford and John Pitcairn, American cities were still importing plate glass from Europe — and more than a dozen domestic manufacturers had already failed. PPG became the first financially successful U.S. plate-glass maker, later expanding into aerospace transparencies, laminated aircraft glass, and ballistic-resistant armor. That restless evolution has carried the materials giant to a 54-consecutive-year dividend increase streak, with raises dating back to 1972.
From ending America's glass import dependency to coating fighter jets — PPG has never stopped raising its dividend.
PPG — Pro-Pac Packaging Ltd
Source: encyclopedia.com; ppg.com/en-US/about
💡 Did You Know
Mortgage REITs Flash High Yields While Quietly Eroding Investor Capital
Mortgage REITs borrow at short-term rates and invest in long-term mortgage-backed securities, pocketing the spread — a model that generates headline yields of 10–15% and attracts income seekers in droves. The danger is their acute sensitivity to rate moves: a flattening yield curve compresses spreads and triggers dividend cuts, while a rate spike — as vividly demonstrated in 2022 — erodes the market value of their portfolios and eats into book value. Most major mREITs have delivered negative total returns over long holding periods despite those eye-catching distributions.
A double-digit yield on an mREIT can be less a reward and more a warning sign in disguise.
Source: Nareit mREIT sector data; Morningstar mREIT performance analysis