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Leading global pure-play vacation ownership company Marriott Vacations Worldwide Corporation (VAC - Free Report) announced a 16.7% increase in its quarterly dividend to 35 cents per share. As announced on Dec 9, the dividend will be distributed on Jan 4, 2017 to shareholders of record at the end of Dec 22. The new dividend will add up to an annual dividend of $1.40 per share.
The company initiated its cash dividend program in Oct 2014 when the Board approved a quarterly dividend of 25 cents per share. Notably, in Dec 2015, the dividend was hiked by 20% to 30 cents.
Consistent dividends serve as an indicator of a company’s financial stability and also its substantial profitability, as dividends are paid out of its retained earnings. Marriott Vacations seems to be in stable financial position as it expects adjusted free cash flow to be in the range of $145–160 million as at the end of fiscal-year 2016.
Marriott Vacations’ expected steady dividend stream may make it an attractive investment option for value investors or investors seeking a stable flow of investment income. The company’s attempt at enhancing long-term shareholder value as it continues to undertake share repurchase activities, even among a volatile economic environment, is appreciable.
Moreover, shares of the company outperformed the broader Zacks categorized Hotels & Motels industry year to date. The stock returned 54% while the industry grew about half of it at 26.7% in the same time frame. We believe that the recent dividend hike will further bolster investor confidence in the company’s financials and lend more upside to the stock.
Upward estimate revisions also reflect optimism in the stock’s prospects. The company’s current-quarter earnings estimates have moved north by 15.8% in the last two months.
Notably, the company has been recording higher contract sales and rental revenues lately. Also, volume per guest – sales volume for a given period divided by the number of groups toured – for Marriott Vacations continues to increase backed by strong marketing initiatives.
However, as the timeshare industry is extensively marketing oriented and relies heavily on sales initiatives to attract customers, the company’s increased marketing expenses have been pressurizing margins. It also faces tough competition from other vacation ownership companies like Wyndham Worldwide Corporation and bigger hospitality services giants like Hyatt Hotels Corporation (H - Free Report) and Hilton Worldwide Holdings, Inc. (HLT - Free Report) .
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Marriott Vacations (VAC) Declares Quarterly Dividend Hike
Leading global pure-play vacation ownership company Marriott Vacations Worldwide Corporation (VAC - Free Report) announced a 16.7% increase in its quarterly dividend to 35 cents per share. As announced on Dec 9, the dividend will be distributed on Jan 4, 2017 to shareholders of record at the end of Dec 22. The new dividend will add up to an annual dividend of $1.40 per share.
The company initiated its cash dividend program in Oct 2014 when the Board approved a quarterly dividend of 25 cents per share. Notably, in Dec 2015, the dividend was hiked by 20% to 30 cents.
Consistent dividends serve as an indicator of a company’s financial stability and also its substantial profitability, as dividends are paid out of its retained earnings. Marriott Vacations seems to be in stable financial position as it expects adjusted free cash flow to be in the range of $145–160 million as at the end of fiscal-year 2016.
Marriott Vacations’ expected steady dividend stream may make it an attractive investment option for value investors or investors seeking a stable flow of investment income. The company’s attempt at enhancing long-term shareholder value as it continues to undertake share repurchase activities, even among a volatile economic environment, is appreciable.
Moreover, shares of the company outperformed the broader Zacks categorized Hotels & Motels industry year to date. The stock returned 54% while the industry grew about half of it at 26.7% in the same time frame. We believe that the recent dividend hike will further bolster investor confidence in the company’s financials and lend more upside to the stock.
Upward estimate revisions also reflect optimism in the stock’s prospects. The company’s current-quarter earnings estimates have moved north by 15.8% in the last two months.
Notably, the company has been recording higher contract sales and rental revenues lately. Also, volume per guest – sales volume for a given period divided by the number of groups toured – for Marriott Vacations continues to increase backed by strong marketing initiatives.
However, as the timeshare industry is extensively marketing oriented and relies heavily on sales initiatives to attract customers, the company’s increased marketing expenses have been pressurizing margins. It also faces tough competition from other vacation ownership companies like Wyndham Worldwide Corporation and bigger hospitality services giants like Hyatt Hotels Corporation (H - Free Report) and Hilton Worldwide Holdings, Inc. (HLT - Free Report) .
The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>