Host Hotels (HST) Rewards Investors With an 11% Dividend Hike
Boosting shareholders’ wealth, Host Hotels & Resorts, Inc. HST recently announced an 11% hike in its cash dividend payment to 20 cents per share for the fourth quarter of 2023 from 18 cents paid out in the prior quarter. Additionally, the company announced a special dividend of 25 cents per share, bringing the total dividends declared for the year to 90 cents per share.
The increased dividend will be paid out on Jan 16, 2024, to shareholders of record as of Dec 29, 2023. With this latest hike, HST’s annual dividend yield now comes to 4.17% based on the company’s share price of $19.15 on Dec 15, 2023. It has increased its dividend eight times in the last five years, which is encouraging. Check out Host Hotels & Resorts’ 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, the company reinstated its dividend payment and resorted to regular dividend hikes. Its latest dividend hike is now at par with the pre-pandemic payout level. This reaffirms shareholders’ confidence in the stock.
This lodging REIT owns a portfolio of luxury and upper-upscale hotels in the Sunbelt region and the top 20 U.S. markets. The improvement in group travel demand and business transient demand — led by the healthy demand from small and medium-sized businesses — have aided the company’s occupancy and revenue per available room (RevPAR) growth over the past few quarters.
In the third quarter of 2023, HST’s comparable hotel RevPAR was $201.32, climbing 1.8% from the year-ago quarter’s $197.76. The comparable average occupancy percentage in the quarter was 71.8%, up 150 basis points from the prior-year quarter.
Given HST’s well-located properties in markets with strong demand drivers, the company is likely to benefit from positive overall demand trends in the upcoming period.
Also, it follows an aggressive capital-recycling program that entails the non-strategic dispositions of assets and redeploying the proceeds for investments in better-yielding assets. This highlights its prudent capital-management practices and enables it to preserve balance sheet strength and capitalize on long-term growth opportunities.
The company maintains a healthy balance sheet position and had $2.6 billion of available liquidity as of Sep 30, 2023. It is the only company with an investment-grade rating among lodging REITs, enjoying ratings of Baa3 from Moody’s and BBB- from both Fitch and S&P Global as of the end of the third quarter of 2023. Additionally, it has no material maturities until April 2024. With a strong financial footing and ample flexibility, HST remains well-positioned to tide over any challenges and bank on growth scopes.
Hence, with improving operating trends, a lower dividend payout ratio compared with the industry and a robust financial position, we expect HST’s latest dividend payout to be sustainable over the long run.
Shares of this Zacks Rank #3 (Hold) company have gained 17.4% in the past three months compared with the industry’s growth of 10.7%.
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Stocks to Consider
Some better-ranked stocks from the REIT sector are Lamar Advertising LAMR, EastGroup Properties EGP and Stag Industrial STAG, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has been raised 1.7% over the past two months to $7.31.
The Zacks Consensus Estimate for EastGroup Properties’ 2023 FFO per share has moved marginally north in the past two months to $7.70.
The Zacks Consensus Estimate for Stag Industrial’s ongoing year’s FFO per share has been raised 1.3% upward over the past two months to $2.28.
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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