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Why Ryman Hospitality Properties (RHP) is a Great Dividend Stock Right Now

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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Ryman Hospitality Properties in Focus

Ryman Hospitality Properties (RHP - Free Report) is headquartered in Nashville, and is in the Finance sector. The stock has seen a price change of -9.53% since the start of the year. The hotel and resort real estate investment trust is currently shelling out a dividend of $1.1 per share, with a dividend yield of 4.42%. This compares to the REIT and Equity Trust - Other industry's yield of 4.42% and the S&P 500's yield of 1.58%.

Taking a look at the company's dividend growth, its current annualized dividend of $4.40 is up 14.3% from last year. Ryman Hospitality Properties has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 0.71%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Ryman Hospitality Properties's current payout ratio is 54%, meaning it paid out 54% of its trailing 12-month EPS as dividend.

RHP is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $8.27 per share, which represents a year-over-year growth rate of 2.22%.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.

High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, RHP is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).


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