For over a decade, leading hotelier, Starwood Hotels & Resorts Worldwide, Inc. (HOT) has been returning wealth to shareholders through regular dividends, stock buybacks and special dividends. Since then, the company has returned approximately $10.0 billion of cash to its shareholders. The company has now decided to shift its mode of dividend payment to a quarterly payout schedule and also announced a special dividend.
Starwood Hotels will pay its first quarterly dividend of 35 cents per share and a special dividend of 65 cents per share on Mar 28, 2014 to stockholders of record as of Mar 11, 2014. The announcement of a special dividend comes in the wake of $500.0 million cash received from the sale of the St. Regis Bal Harbour residential project, which it wants to distribute among its shareholders.
In an effort to enhance shareholder value, the company has been increasing its dividend at regular intervals. In Oct 2013, the hotelier raised its annual cash dividend by 8.0% to $1.35 per share. Earlier, in 2012, 2011 and 2010, Starwood raised its dividend by a respective 150.0%, 67% and 50%.
Like Starwood, another hospitality company Wyndham Worldwide Corporation (WYN) has also been making share buybacks. During 2013, Starwood repurchased 4.9 million shares for $315.6 million and has $614.0 million available under its share repurchase authorization. The share buyback will help the company reduce outstanding share count, thereby increasing earnings per share and return on equity.
Increase in share buyback authorization and quarterly dividend payments affirm the company’s optimistic outlook and growth prospects. Moreover, since the company regularly divests assets; it would likely bring in more special dividends, going forward.
This Zacks Rank #4 (Sell) company posted mixed fourth quarter 2013 results on feb 13, 2014 with earnings beating the Zacks Consensus Estimate and revenues missing the same. Some better-ranked stocks in the hotel industry include Extended Stay America, Inc. (STAY) and Marriott International, Inc. (MAR). Both these stocks hold a Zacks Rank #2 (Buy).
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