Bethesda, Maryland-based Marriott International, Inc (MAR) recently announced a hike in its quarterly dividend payout by 1.25 cents to 10 cents per share, reflecting an increase of 14% from the prior dividend. The increased dividend will be paid on June 24, 2011, to stockholders of record as of May 20, 2011. The hike in dividend is expected to enhance the annual dividend yield to 1.1% as of May 16, 2011.
Marriott also intends to bolster shareholder’s value through a share buyback program. The company’s board of directors has raised the share repurchase authorization by an additional 25 million shares. Marriot’s current 34 million outstanding share buyback authorization includes 9 million shares remaining from the previous sanction.
The hotel and leisure company reported that it has purchased 15 million shares for $540 million year to date till May 4, 2011, which represents 1.5 million of additional share repurchases since the company reported earnings on April 20.
Last year in November, the company increased its dividend from 4 cents to 8.75 cents and also announced a repurchase authorization of 25 million shares, indicating an improvement in economic conditions.
We appreciate Marriott’s effort to enhance shareholder return and it is also in line with the company’s goal to return $3.3 billion to $5.3 billion to shareholders from 2011 through 2013 through dividends and share repurchases, as announced on its investor day in October 2010.
Marriott’s balance sheet position is strong and under levered, with cash balance of $144 million at the end of the first quarter of 2011. Moreover, after the spin off of the timeshare unit in 2011, the debt burden of the company is expected to reduce further. Thus, the company has substantial capacity to enhance shareholder value
One of Marriott’s peers, Wynn Resorts Ltd. (WYNN), announced an increment in its dividend by 100% to 50 cents on April 19.
Another competitor, Wyndham Worldwide Corporation (WYN), also increased its quarterly dividend by 3 cents to 15 cents, which translates into a 25.0% increase.
Starwood Hotels & Resorts Worldwide Inc (HOT), a rival of Marriot,increased its quarterly dividend by 50% to 30 cents per share on November, 2010, with an intention to boost shareholder value.
Marriott’s enhanced annualized dividend yield of 1.10% is below the industry average of 1.39% and also lags forward annualized dividend yields of 1.37% and 1.76% of Wynn Resorts and Wyndham, respectively. However, the company’s dividend yield is better than the yield of 0.5% of Starwood Hotels.
We believe that an increase in dividend payment affirms the company’s optimistic outlook and depicts that it is heading toward strong future growth.
STARWOOD HOTELS (HOT): Free Stock Analysis Report
MARRIOTT INTL-A (MAR): Free Stock Analysis Report
WYNDHAM WORLDWD (WYN): Free Stock Analysis Report
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