Host Hotels (HST) Rewards Investors With a Dividend Raise
Boosting shareholders’ wealth, Host Hotels & Resorts, Inc. HST recently announced a 25% sequential hike in its second-quarter 2023 cash dividend payment to 15 cents per share from 12 cents paid out earlier.
The increased dividend will be paid out on Jul 17 to shareholders on record as of Jun 30, 2023. With this latest hike, HST’s annual dividend yield now comes to 3.43% based on the company’s share price of $17.46 on Jun 14, 2023. Moreover, the company has increased its dividend five times in the last five years. Check Host Hotels’ dividend history here.
Solid dividend payouts are the biggest enticements for real estate investment trust (REIT) investors, and Host Hotels has remained committed to that. After a brief suspension of its dividend payments during the pandemic, in February 2022, the company reinstated its dividend payment and announced a regular quarterly cash dividend of 3 cents per share.
Moreover, backed by accelerated lodging recovery in first-quarter 2022, Host Hotels doubled its dividend to 6 cents per share from 3 cents paid out earlier. Further, in August 2022, given its solid second-quarter 2022 results, it again doubled its quarterly cash dividend to 12 cents. Although the payment is lower than the pre-pandemic level of 20 cents, these efforts to increase the dividend are encouraging.
This lodging REIT has a portfolio of luxury and upper-upscale hotels in the United States and abroad. With the industry rebounding in the wake of the pandemic, HST’s well-located properties in markets with strong demand drivers are likely to benefit.
The continued momentum in leisure travel demand has fueled demand for the company’s properties. Also, healthy demand from small and medium-sized businesses, representing a large share of the company’s corporate demand, has aided business transient recovery.
In the first quarter of 2023, HST reported comparable revenue per available room (RevPAR) of $217.77, rising 31.1% from the year-ago quarter’s $166.12. It was the fourth consecutive quarter where RevPAR exceeded the 2019 levels. Also, group revenues surpassed 2019 levels for the third straight quarter, driven by 14% growth in rates.
HST maintains a healthy balance sheet and is the only company with an investment-grade rating among lodging REITs. Its total available liquidity totaled $2.3 billion as of Mar 31, 2023. Moreover, it has no material maturities until April 2024. With ample financial flexibility, HST remains well-poised to tide over any challenges and bank on growth scopes.
Hence, with improving operating fundamentals, a lower dividend payout ratio compared with the industry and a solid financial position, we expect the latest dividend rate to be sustainable.
Shares of this Zacks Rank#3 (Hold) company have gained 8.8% in the year-to-date period against the industry’s fall of 1.3%.
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Stocks to Consider
Some better-ranked stocks from the REIT sector are Ventas VTR, Rexford Industrial Realty REXR and Innovative Industrial Properties IIPR. Each of these companies presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Ventas’ ongoing year’s funds from operations (FFO) per share has been raised marginally over the past month to $2.98.
The Zacks Consensus Estimate for Rexford Industrial’s current-year funds from operations (FFO) per share has moved marginally northward over the past two months to $2.19.
The Zacks Consensus Estimate for Innovative Industrial Properties’ 2023 FFO per share has moved 3.6% upward in the past two months to $8.66.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Host Hotels & Resorts, Inc. (HST) : Free Stock Analysis Report
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