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Host Hotels Hikes Dividend

by Zacks Equity Research

June 16, 2011 | Comments : 0 Recommended this article: (0)

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Host Hotels & Resorts, Inc. (HST - Analyst Report) a real estate investment trust (REIT) recently hiked its quarterly cash dividend by 1 cent to 3 cents per share. This translates into a massive 50% increase over the earlier dividend.

The increased dividend will be paid on July 15, 2011, to stockholders of record on June 30, 2011. This takes the annual dividend yield as of June 15, 2011, to 76.0%.

The company increased the first quarter common dividend by 1 cent to 2 cents per share. As operations continue to improve, Host Hotels expect to increase the common dividend over the next 2 quarters, with the expectation of a full year dividend of $0.10 to $0.15 per share.

At the end of first quarter 2011, Host Hotels' cash balance stood at $154 million. Host Hotels has a strong balance sheet, which provides the financial flexibility to aim at high-yielding acquisitions, high ROI (return on investments) capital projects, dividend payouts, and share buybacks.

This augurs well for its long-term growth. We believe the company has enough cash and cash equivalents to provide optimum shareholder value.

During the first quarter first quarter 2011 FFO (funds from operations) stood at $77 million or 11 cents per share, compared to $49 million or 8 cents per share in the year-earlier quarter. Fund from operations, 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.

Host Hotels is the largest lodging REIT with high quality lodging assets in geographically diverse locations. Over the years, the company has executed a focused and disciplined long-term strategic plan to acquire high quality lodging assets in hard-to-replicate areas which have the potential for significant capital appreciation.

Host Hotels currently retain a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, La Salle Hotel properties (LHO - Snapshot Report) currently retains a Zacks #3 Rank.

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