On the 16 July 2018, Park Hotels & Resorts Inc (NYSE:PK) will be paying shareholders an upcoming dividend amount of US$0.88 per share. However, investors must have bought the company’s stock before 28 June 2018 in order to qualify for the payment. That means you have only 2 days left! Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Park Hotels & Resorts’s latest financial data to analyse its dividend attributes. Check out our latest analysis for Park Hotels & Resorts
How I analyze a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is their annual yield among the top 25% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share amount increased over the past?
- Does earnings amply cover its dividend payments?
- Will it be able to continue to payout at the current rate in the future?
How well does Park Hotels & Resorts fit our criteria?
REITs are a special-case dividend payer. This is because a high percentage of their earnings are required to be paid out as dividends. The current trailing twelve-month payout ratio for PK is 93.65%, which is in-line with most other REIT stocks. Going forward, analysts expect PK’s payout to increase to 110.43% of its earnings, which leads to a dividend yield of around 6.24%. However, EPS is forecasted to fall to $1.58 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. The reality is that it is too early to consider Park Hotels & Resorts as a dividend investment. It has only been paying out dividend for the past one year. Generally, the rule of thumb for determining whether a stock is a reliable dividend payer is that it should be consistently paying dividends for the past 10 years or more. Clearly there’s a long road ahead before we can ascertain whether PK one as a stable dividend player.
In terms of its peers, Park Hotels & Resorts produces a yield of 5.92%, which is high for REITs stocks.
If you are building an income portfolio, then Park Hotels & Resorts is a complicated choice since it has some positive aspects as well as negative ones. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three fundamental factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for PK’s future growth? Take a look at our free research report of analyst consensus for PK’s outlook.
- Valuation: What is PK worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether PK is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.