Marriott International Inc. (MAR), a leading worldwide hospitality company, recently announced its decision to hike its quarterly dividend by 30% to 17 cents per share from 13 cents per share. The quarterly dividend equates to an annualized dividend payment of 68 cents per share. The increased dividend will be paid on Jun 28, 2013 to stockholders of record as of May 24.
Marriott has a consistent track record of paying dividends and the latest hike brings the forward annual dividend yield, as of May 10, 2013, to 1.55%. The current hike comes exactly after a year. The company had last increased its dividend in May 2012, from 10 cents to 13 cents, which was paid on Jun 22, 2012. Prior to that, in May 2011, Marriott had increased its quarterly dividend by 14% to 10 cents per share.
In a concerted effort to enhance shareholder value, the Bethesda, Md-based company also has a share buyback program in place. In the recently-concluded first quarter of 2013, the company bought back 5.4 million shares worth $212 million. At the end of the quarter, nearly 26.2 million shares remained under the current share repurchase program.
Marriot is striving hard toward its goal of returning $800 million – $1 billion to shareholders in 2013, through share repurchase and dividends. However, Marriott is not the only company in the lodging sector paying attractive dividends. Another sector behemoth, Starwood Hotels & Resorts Worldwide Inc. (HOT) also has a dividend policy of paying out 25% to 40% of earnings per share every year. In Oct 2012, Starwood raised its annual cash dividend by 150% to $1.25 per share, offering one of the best yields in the sector.
We appreciate Marriott’s efforts to consistently enhance long-term shareholder value even amid a volatile economic condition. We believe that an increase in dividend payment affirms the company’s optimistic outlook and indicates strong future growth. Marriott has also raised its earnings per share guidance for 2013, which we believe, might lead to further increase in dividend.
Marriott currently carries a Zacks Rank #2 (Buy). Some other hoteliers like Marriott Vacations Worldwide Corp. (VAC) and Home Inns & Hotels Management Inc. (HMIN) look attractive at current levels with a Zacks Rank #1 (Strong Buy).
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