Marriott Vacations Worldwide Corporation (VAC - Free Report) announced a 20% increase in its quarterly dividend to 54 cents per share. The raised dividend will be paid to its shareholders on or around Jan 6, 2020, of record as of Dec 23, 2019. Notably, the dividend yield, based on the new payout and the last closing market price, is approximately 1.75%.
Last December, Marriott Vacations hiked its dividend to 45 cents from 40 cents per share by 12.5%. Notably, the company’s steady dividend paying history is likely to make it an attractive investment choice for value investors or investors seeking a stable stream of investment income.
Consistent dividend hikes highlights company's financial stability and its ability to sustain profits. Marriott Vacations’ attempt at enhancing long-term shareholders' value, even in a volatile economic environment, is appreciable.
Rationale Behind the Dividend Hike
Marriott Vacations’ strong balance sheet and cash flow allows the company to take shareholder-friendly initiatives. The company had cash and cash equivalents of $183 million as of Sep 30, 2019, and generated $277 million as cash from operating activities in 2019.
In the third quarter of 2019, Marriott Vacations repurchased an additional 4.3 million shares. Going forward, management plans to continue repurchasing shares and paying dividends.
Furthermore, the company anticipates its adjusted free cash flow outlook to be $440-490 million for the full year. Also, it continues to expect that cash flow generation in 2019 will support sales growth.
Year to date, shares of the company outperformed the Hotels & Motels industry. The stock has surged 75.4% compared with the industry’s 28.6% rally.
We believe that the recent dividend hike will further bolster investor confidence in the company’s financials and lend more upside to the stock.
Zacks Rank and Stocks to Consider
Marriott Vacations, which shares space with Choice Hotels International, Inc. (CHH - Free Report) , has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include Civeo Corporation (CVEO - Free Report) and Wyndham Destinations, Inc. (WYND - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Civeo and Wyndham reported better-than-expected earnings in three of the trailing four quarters, with the average beat being 42.5% and 7.2%, respectively.
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