I view the current virus-related selloff in the travel and leisure sector as a buying opportunity. Thus, I want to add a blue-chip hotel REIT to our portfolio, explains notes Bryan Perry, income expert and editor of Cash Machine.
Host Hotels & Resorts (HST) pays an attractive dividend yield and is trading off its recent high by 12%. The shares yield 4.8% at their current price of $16.80.
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Host Hotels & Resorts is the largest lodging real estate investment trust (REIT) and is one of the biggest owners of luxury and upper-upscale hotels.
The company currently owns 80 properties in the United States and five properties internationally that, together, total approximately 47,000 rooms. It is the only lodging REIT with an investment-grade credit rating.
Some of the 40 iconic properties include Boston Marriott in Copley Place, Fairmont Kea Lani, Maui, Grand Hyatt San Francisco, New York Marriott Marquis, Sheraton Times Square Hotel, The Phoenician Scottsdale, Ritz-Carlton Naples, St. Regis Houston, Westin Seattle and W Hotel Hollywood.
The company has been forecast to earn about $1.65 per share from Q4 2019 through Q3 of 2020. Thus, the stock is trading at just 10 times forward earnings. With an annual dividend payout of 80 cents, the current payout ratio is a very conservative 51.2%.
Shares are trading right on its long-term moving average, per the chart below. I think the stock can trade up to $20, implying a total return of over 25% in a year. Let’s get long in this best-in-class hotel REIT at a deep discount.