Weyerhaeuser Co. today declared a special $5.6 billion dividend that represents the conglomerate's final major step toward converting into a real estate investment trust (REIT).

The special dividend includes the regular quarterly dividend of approximately $11 million and is payable to shareholders of record as of July 22. It's payable in cash or stock with a total cash payment limited to $560 million, or 10% of the total. Weyerhaeuser expects to pay the special dividend on Sept. 1. It then will elect to become a REIT effective Jan. 1 when it files its 2010 tax return next year.

"The REIT structure best supports our strategic direction and positions Weyerhaeuser for future growth," Dan Fulton, president and chief executive officer, said in a statement. "The tax efficiency of the REIT structure also will enable us to increase our timberland earnings and make higher distributions to our shareholders."

A REIT differs from a typical public company in that it specializes in real estate and mortgages. REITs receive special tax considerations and typically offer investors high yields. A large number of Weyerhaeuser's competitors already are owned by REITs.

Federal Way, Wash.-based Weyerhaeuser is highly diversified, with holdings that range from timberlands to mills to home-building operations. It has been hurt by the housing market's crash, but lately conditions have improved. The company reported April 29 that its wood products unit shrank its pretax loss to just $19 million in the first quarter from a $266 million loss a year earlier, and it said it was likely the segment will turn a profit in the second quarter.