Earlier this week, Host Hotels & Resorts Inc. (HST) – a real estate investment trust (:REIT) – announced an 11% sequential hike in its quarterly cash dividend rate. The company will now pay a dividend of 10 cents per share compared with 9 cents paid in the prior quarter. The increased dividend will be paid on Apr 15, 2013 to stockholders of record on Mar 28, 2013.
Host Hotels has a strong balance sheet, which provides the financial flexibility to aim at high-yielding acquisitions, high ROI (return on investments) capital projects, steady dividend payouts and share buybacks.
In addition, the company is making concerted efforts towards increasing shareholders’ wealth and accordingly, it has recently hiked its dividend payout for the 9th consecutive time. Notably, a steady dividend payout facilitates the long-term strategy of Host Hotels to provide attractive risk-adjusted returns to its stockholders.
Host Hotels is a leading lodging REIT and operates luxury and upper-upscale hotels across hard-to-replicate areas, which have the potential for significant capital appreciation. Recently, it completed a joint venture agreement with Hyatt Hotels Corp. (H) for a vacation ownership project. Also, it acquired 5 hotels in Europe through a joint venture. Such strategic investments strengthen its leading position in the market.
The company reported fourth quarter 2012 adjusted FFO (funds from operations) per share of 40 cents, beating the Zacks Consensus Estimate by 3 cents. This also exceeded the year-ago adjusted FFO by 25%.
The results followed a strong performance of the company’s operating properties. With strong quarterly results, the company is well poised to maintain its growth curves and simultaneously benefit the shareholders with steadily rising dividends.
As a matter of fact, a number of REIT firms have increased their dividend payouts recently. This includes Simon Property Group Inc. (SPG) that has raised its dividend by 4.5% sequentially while BRE Properties Inc. (BRE) declared a 2.6% sequential hike in its quarterly cash dividend.
Solid dividend payouts are arguably the biggest attraction for REIT investors as the U.S. law requires these companies to distribute 90% of their annual taxable income in the form of dividends to shareholders.
Host Hotels currently carries a Zacks Rank #3 (Hold).
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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