Back to top

Analyst Blog

In tune with its efforts to boost stockholders’ return, real estate investment trust (REIT) Host Hotels & Resorts, Inc. hiked its quarterly cash dividend by 8.3% sequentially to 13 cents per share. With this, the company’s total dividend for 2013 comes in at 46 cents, up 53% year over year.

The dividend will be paid on Jan 15, 2014 to shareholders of record as of Dec 31, 2013. Host Hotels’ current payout marks its 12th consecutive quarterly dividend increase.

Host Hotels’ history of increasing quarterly dividend reflects its long-term strategy to provide attractive risk-adjusted returns to shareholders. So it is an attractive pick for investors looking for high dividend yields. However, the company slashed its dividend twice following the sub-prime mortgage crisis in 2007 that affected many REITs.

Notably, Host Hotels’ current annual dividend yield is fairly decent at approximately 2.5% based on its closing price of $18.41 as on Dec 17.

Given its strong and flexible balance sheet, Host Hotels has adequate room to increase its dividend rate, going forward. Moreover, as of Sep 30, 2013, the company had cash and cash equivalents worth $354 million. We believe that it has adequate cash for continuing with strategic investments, going forward.

Apart from Host Hotels, many other REITs have increased their dividends in the recent times.  Parkway Properties Inc. hiked its quarterly cash dividend by 25% sequentially to 18.75 cents per share and W. P. Carey Inc. raised its quarterly cash dividend by 1.2% sequentially to 87 cents per share.  W. P. Carey also declared a fourth-quarter special dividend of 11 cents per share.

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 to shareholders.

Host Hotels currently carries a Zacks Rank #3 (Hold). However, Getty Realty Corp. is a Zacks Rank #1 (Strong Buy) REIT stock.

Please login to Zacks.com or register to post a comment.