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Host Hotels Announces Special Dividend: Time to Hold the Stock?

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Host Hotels & Resorts Inc.’s (HST - Free Report) board of directors announced a special dividend of 10 cents per share. This is in addition to a quarterly cash dividend of 20 cents per share. The total dividend will be paid out on Jan. 15, 2025, to shareholders of record as of Dec. 31, 2024.

Including the special dividend, the total dividends declared for the year now come to 90 cents per share. At this new rate, the annualized yield reaches 4.75% based on the stock’s closing price of $18.93 on Dec. 11.

Solid dividend payouts are the biggest attraction for REIT investors, and Host Hotels remains committed to that. The company has increased its dividend seven times in the last five years, and its five-year annualized dividend growth rate is 6.73%. Check Host Hotels’ dividend history here.

Usually, special dividends are paid out by REITs on capital gains from the sale of assets to avoid paying taxes. The U.S. law requires these companies to distribute at least 90% of their taxable income to their shareholders annually in the form of dividends.

Is it Time to Hold HST Stock?

HST boasts a portfolio of luxury and upper-upscale hotels in the top U.S. markets and the Sunbelt region. The continuous improvement in group business have aided occupancy and revenue per available room (RevPAR) growth over the past few quarters. Also, aggressive capital-recycling efforts augur well for long-term growth.

Host Hotels maintains a healthy balance sheet. It exited the third quarter of 2024 with $2.3 billion of total available liquidity. Continued cost-containment and prudent expense-management efforts have helped the company preserve liquidity. Moreover, it is the only company with an investment-grade rating among lodging REITs. Further, as of the end of the third quarter of 2024, the company enjoyed investment-grade ratings of Baa3/Positive from Moody’s, BBB-/Stable from S&P Global and BBB/Stable from Fitch, providing access to the debt market at favorable costs.

Its trailing 12-month return on equity (ROE) is 10.72% compared with the industry’s average of 2.49%. This reflects that the company is more efficient in using shareholders’ funds than its peers.

Backed by healthy operating fundamentals and ample financial flexibility, the company is well-poised to capitalize on growth opportunities and reward shareholders handsomely. Hence, given the above-mentioned factors, it seems wise to hold HST in your portfolio right now.

In the past three months, shares of this Zacks Rank #3 (Hold) company have gained 9% against the industry’s decline of 9.7%.

 

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Stocks to Consider

Some better-ranked stocks from the broader REIT sector are Welltower (WELL - Free Report) and Cousins Properties (CUZ - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Welltower’s 2024 FFO per share is pinned at $4.26, implying year-over-year growth of 17%.

The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share is pegged at $2.68, indicating an increase of 2.3% from the year-ago reported figure.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.


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