Consistent with its efforts to enhance stockholders’ value, Host Hotels & Resorts Inc. (HST) raised its quarterly cash dividend by 7.1% sequentially to 15 cents per share from 14 cents. The new dividend will be paid on Jul 15, 2014 to shareholders of record as of Jun 30, 2014.
Based on this, the 2014 annual dividend rate comes to 60 cents per share and results in an annualized yield of about 2.8% considering Host Hotels’ closing price of $21.47 on May 14.
Host Hotels has a solid track record of increasing shareholders’ wealth and has accordingly hiked its dividend payout for the 14th consecutive quarter, since Mar 2011. Notably, a steady dividend payout facilitates the long-term strategy of this lodging real estate investment trust (:REIT) to provide attractive risk-adjusted returns to stockholders.
This dividend hike followed the strong first-quarter 2014 results announcement of Host Hotels earlier this month. The company’s adjusted funds from operations (:FFO) per share of 33 cents, exceeded the Zacks Consensus Estimate by 3 cents and the year-ago figure by a nickel. This was driven by a notable rise in Revenue Per Available Room (RevPAR) and food and beverage operations, in the comparable hotels. Encouragingly, Host Hotels also increased its 2014 FFO per share guidance range.
We believe Host Hotels is poised to grow and reward investors in the quarters ahead, owing to its solid operating portfolio performance as well as improving market fundamentals, especially in the West Coast market.
As a matter of fact, solid dividend payouts are arguably the biggest attraction for REIT investors as the U.S. law requires these companies to distribute 90% of their annual taxable income in the form of dividends to shareholders.
Host Hotels currently carries a Zacks Rank #3 (Hold). Investors interested in lodging REITs may consider stocks like Chesapeake Lodging Trust (CHSP), Chatham Lodging Trust (CLDT) and RLJ Lodging Trust (RLJ). All three stocks carry a Zacks Rank #2 (Buy).
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.