Investing

Wall Street Loves This Lodging Stock That Grew Its Dividend 207% Last Year

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Investors love dividends for a variety of reasons. They provide assurance that a company is financially healthy enough to reward investors. Dividend stocks tend to perform better in market downturns and recessions. Dividends may offer tax advantages and help mitigate losses. And they offer total return (stock appreciation plus distributions), which is particularly attractive for income-seeking investors. So a big dividend hike, like at Park Hotels & Resorts Inc. (NYSE: PK) last year, is sure to garner investor attention.

The quarterly dividend increased last year from $0.15 per share to $0.93. But that’s not all, because the lodging company also paid out a special dividend of $0.77 a share last year. Together, that equates to an increase of 207.1% for the year. Park Hotels is not a Dividend Aristocrat, meaning that it has not increased its payout every year for at least 25 years. In fact, the payout has been variable over the years. Since 2017, it has ranged from $0.01 to $2.79 per share.

Park Hotels’ Prospects

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This dividend payer is one of the largest publicly traded hospitality real estate investment trusts (REITs). It has a diverse portfolio of 43 premium-branded hotels and resorts with over 26,000 rooms primarily located in prime city center and resort locations and having significant underlying real estate value. Its banners include the Waldorf Astoria Hotels and Resorts, Conrad Hotels & Resorts, Hilton Hotels & Resorts, DoubleTree by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, and Curio. (See which hotel brands are most popular with baby boomers.)

Conrad Hilton founded the company in 1919, and its headquarters are in Tysons, Virginia. Competitors include Apple Hospitality REIT Inc. (NYSE: APLE), DiamondRock Hospitality Co. (NYSE: DRH), and Sunstone Hotel Investors Inc. (NYSE: SHO).

The company posted strong fourth-quarter and full-year 2023 results back in February, and its first-quarter report is scheduled for May 1. Park Hotels has been recognized for its sustainability efforts. Newsweek named it one of America’s Most Responsible Companies for 2024, which is the fourth time Park Hotels appeared on the annual list.

Its share price increased 30.4% last year and is over 13% higher so far this year. It hit a 52-week high of $18.05 last month. The consensus price target is up at $19.83. That means analysts see more than 14% further upside in the next year. Analysts on average cautiously recommend buying shares.

Note that billionaire investor Steve Cohen increased his stake in the company last year.

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