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Royal Caribbean Boosts Shareholder Value, Hikes Dividend

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Royal Caribbean Cruises Ltd. (RCL - Free Report) recently announced a 11% hike in quarterly dividend to 78 cents per share. The raised dividend will be paid to its shareholders on Oct 11, 2019, of record as on Sep 20. Notably, the new raise will take the annual dividend to $3.12 a share. The dividend yield, based on the new payout and the last closing market price, is approximately 2.88%.   

Last June, Royal Caribbean hiked its dividend by 16.7%. The company’s steady dividend paying history is likely to make it an attractive investment choice for value investors or investors seeking a stable stream of investment income.

Consistent dividend hikes highlights a company's financial stability and its ability to sustain profits. The company's attempt at enhancing long-term shareholders' value, even in a volatile economic environment, is appreciable.

Rationale Behind the Dividend Hike

Royal Caribbean reported better-than-expected earnings in the second quarter of 2019. With this, the company posted earnings beat for the 18th straight quarter. Its adjusted earnings were $2.54 per share, which surpassed the Zacks Consensus Estimate of $2.45. The bottom line also rose 11.9% year over year on higher revenues.

Since 2017, Royal Caribbean has been consistently witnessing solid demand from its key markets of operations. Last year, demand for all its brands and itineraries increased significantly. This trend is likely to continue in 2019.

Furthermore, shares of  Royal Caribbean have gained 10.8.% year to date compared with the industry’s 3.7% growth.


Zacks Rank & Key Picks

Royal Caribbean, which shares space with Carnival Corporation & Plc (CCL - Free Report) , carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are OneSpaWorld Holdings Limited (OSW - Free Report) and SeaWorld Entertainment, Inc. , each carrying a Zacks Rank #2 (Buy). You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

OneSpaWorld has an impressive long-term earnings growth rate of 20%.

SeaWorld Entertainment expected average earnings surprise for the trailing four quarters is 34.9%.

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