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As real-estate investment trusts desperately try to hoard cash, shareholders are poised to lose out on some $4.76 billion worth of dividend payments over the next year.

This is giving some investors pause given that dividends are the core driver for investing in REITs, which must pay at least 90% of their taxable income out as quarterly payouts.

Within the last 10 months, roughly 30% of all listed REITs have suspended, cut or switched to paying part of their dividend in company stock, according to data compiled by BMO Capital Markets. Such measures come as many REITs try to save cash to pay down debt and strengthen their balance sheets amid a continuing credit crunch and depressed stock values.

"It's the worst it's ever been," Mike Kirby, an analyst at Green Street Advisors, said of the amount of dividend reductions. "We will see more cuts."

The dividend cuts are in line with broader market trends with corporate giants like General Electric Co. (GE) and JP Morgan Chase & Co. (JPM) slashing their quarterly payouts. Sacrificing the dividend generates big savings for the REITs, but it's been brutal on their shares.

The average return for the 45 REITs that have cut their dividends since May of last year is down roughly 30%. That's measured from the date of each dividend cut announcement, according to BMO Capital. By comparison, the average decline of the MSCI US REIT Index over a comparable time period is 26%.

"That could be considered a meaningful gap between the REIT index and those that have cut" their dividends, said Paul Adornato, an analyst at BMO Capital.

REITs, which own about $600 billion of commercial real estate assets, were established in the 1960s to give individuals an easy way to invest in income-producing real estate. Such companies typically focus on distinct areas of property, such as offices, retail or apartments.

Meanwhile, more REITs are moving to offer common and special dividends comprised partly of company stock in the wake of a revised rule on the matter by the Internal Revenue Service a few months ago. Since the beginning of the year, Simon Property Group, Inc. (SPG), Vornado Realty Trust (VNO) and Sunstone Hotel Investors Inc. (SHO) said they would pay a portion of their regular dividend in stock.

"What you're seeing now is companies are electing not to pay them even if they have the cash," said Jay Leupp, a portfolio manager for Grubb & Ellis AGA Realty Income Fund. "We think that's a bit too extreme."

"As a REIT investor, we view this option as a last resort for companies that truly are in need of preserving capital near term," he said. "We would always prefer for companies that we invest in to pay cash dividends because that truly is the implied promise that the company makes to an investor."

Investors noted that Simon Property and Vornado aren't in crisis mode and could afford to keep paying a cash dividend. Indeed, Simon Property, a mall operator and the largest U.S. public REIT, said during its recent earnings call that switching its dividend to 10% cash and 90% stock wasn't in response to the embattled retail environment. But it was a means of being conservative with capital.

A positive consequence from rising risk perception is that REIT investors are benefitting from historically high yields. Industry observers pointed to yields of between 8% to 10%. Such levels stack up relatively well compared with other income-oriented vehicles like banking stocks, analysts and investors say.

Shrinking dividends come as the outlook for commercial real estate gets more dire amid few indications that frozen credit markets will thaw soon. As such, investors are skittish about debt-laded REITs such as mall operator General Growth Properties (GGP), which is flirting with triggering one of the largest real estate bankruptcies in history.

REITs have moved from being "on the extreme safe end of the spectrum ... to the extreme risk end of the spectrum," said Joel Bloomer, a senior equity analyst at Morningstar Inc. He noted a departure of investors has partly fueled the volatility in REIT shares.

He said among the 70 REITs Morningstar covers, less than 10 could maintain their dividend. "But, even those (companies) are likely to cut their dividend to preserve capital."

David Levy, a portfolio manager for Franklin Templeton Real Estate Advisors, said the stronger REITs haven't cut their dividends and most still pay them entirely in cash.

For instance, Levy said the healthcare sector still benefits from relatively stable cash flows. "There's little to no risk of a dividend cut in the medium to higher quality names in that sector," Levy said.

Amid the challenging environment, Grubb & Ellis' Leupp said his fund is comprised 80% of companies that distribute preferred dividends, which have preference over common distributions.

Leupp noted, so far, no REIT has elected to pay part of its preferred dividend in stock. However, beleaguered office property REIT Maguire Properties Inc. (MPG) said in December that it would suspend its Series A preferred stock dividends through Jan. 31. The move came more than six months after the company suspended its common payout.

-By A.D. Pruitt, Dow Jones Newswires; 201-938-2269; angela.pruitt@dowjones.com