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Choice Hotels Hikes Dividend to Boost Shareholders' Value

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Choice Hotels International, Inc. CHH recently announced a hike in its quarterly dividend payout. The company raised its quarterly dividend by 4.7%, which indicates its intention to utilize free cash for boosting shareholders’ returns.

The company raised quarterly dividend to 22.5 cents per share (or 90 cents annually) from the previous payout of 21.5 cents (or 86 cents annually). The hiked dividend will be paid out on Jan 16, 2020 to shareholders on record as of Jan 2, 2020.  Notably, the dividend yield, based on the new payout and the last closing market price, is approximately 0.9%.  

This hike reflects on the lodging franchisors’ solid progress on its flagship Comfort brand, renovated hotels that are capturing more business travel on high developer demand and rapid growth in upscale Cambria brand.

Importantly, Choice Hotels maintains a capital structure with high financial returns. The company has a historical record of returning value to its shareholders through repurchases and dividends. In the first nine months of 2019, Choice Hotels paid cash dividends of $36 million.

Price Performance

Shares of Choice Hotels have surged 41.6% year to date compared with the Zacks Hotels and Motels industry's 32.1% rally. Consistent expansion through acquisitions and franchise agreements are major positives. The company’s regular return of wealth to shareholders is also commendable.

Choice Hotels’ riveting growth potential depends on the expansion of its brands. In fact, the company’s portfolio of well-segmented brands is getting evidently stronger. With expansion of the mid-scale brand, the acquisition of WoodSpring as well as transformation and advancement of the Comfort and Cambria brands, Choice Hotels is poised for growth in 2019 and beyond.

Zacks Rank & Key Picks

Currently, Choice Hotels carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Some better-ranked stocks in the Consumer Discretionary sector are Gray Television, Inc (GTN - Free Report) , GreenTree Hospitality Group Ltd GHG and Civeo Corporation CVEO. Gray Television and GreenTree sport a Zacks Rank #1, whereas Civeo carries a Zacks Rank #2 (Buy).

Gray Television surpassed estimates in all of the trailing four quarters, the average being 66%.

GreenTree has three-five year expected earnings per share growth rate of 17.6%.

Civeo’s current year earnings are expected to rise 75.8%.

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