RLJ Lodging Trust (RLJ), a real estate investment trust (:REIT), has recently increased its quarterly dividend from 16.5 cents to 20.5 cents per share. This translates to a 24% increase from the prior-quarter dividend payout. The dividend is payable on January 15, 2013 to shareholders of record on December 31, 2012. Based on the closing price of $18.65, the dividend yield is fairly decent at approximately 4.4%.
RLJ Lodging has declared overall dividend of 70 cents for 2012, including the 4 cents increase of the fourth quarter. The company expects to distribute excess cash to shareholders through the increased dividend and concurrently look to maintain its cash flow for further reinvestments. Solid dividend payouts are arguably the best enticement for REIT investors as U.S. law requires REITs to distribute 90% of their annual taxable income in the form of dividend to shareholders.
At the end of third quarter 2012, cash and cash equivalents stood at $192.1 million. We believe that the company has enough cash to provide optimum shareholder value. The company has a flexible balance sheet and is well-positioned to take advantage of investment opportunities in the future.
Based in Bethesda, Maryland, RLJ Lodging Trust operates premium upscale full-service hotels across the U.S. Currently the company owns 145 hotels in 21 states and the District of Columbia, totalling more than 21,600 rooms.
In the recently-concluded third quarter 2012, RLJ reported adjusted funds from operations (:FFO) of $50.6 million or 48 cents per share, up 28.4% from the prior year period. The Zacks Consensus Estimates for 2012 and 2013 earnings are pegged at $1.71 and $2.11 respectively representing year-over-year growth of 15.2% and 23.9% respectively.
RLJ Lodging Trust currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. One of its competitors, Host Hotels & Resorts Inc (HST) also holds a Zacks #3 Rank.
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