Can Marriott’s Dividend Payout Increase in 2017?
Consistent dividend payer
Marriott (MAR) has a 16-year history of paying dividends. InterContinental Hotel Group (IHG) has also paid dividends since 2003, and Wyndham Worldwide (WYN) has paid dividends since 2007. Hilton (HLT) started paying dividends in 2015, while Hyatt (H) does not pay dividends at all.
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On August 3, 2017, Marriott’s (MAR) closing price was $103.50, with an indicated dividend yield of 1.3%. Wyndham has an indicated dividend yield of 2.3%, which is the highest among its peers. InterContinental Hotel Group (IHG) follows with an indicated dividend yield of 1.4%, and Hilton has an indicated dividend yield of 0.96%.
Cash dividend ratio
MAR’s cash dividend ratio stood at 7.4x at the end of 1Q17, indicating its ability to sustain dividend payouts. A ratio less than 1.0 indicates dividend payouts that are higher than the company’s cash flows, which may be difficult to sustain.
Can MAR’s dividend payouts increase?
Marriott’s (MAR) management has the intention of continuing its 30% dividend payout, resulting in $1.4 billion–$1.5 billion being returned to shareholders as dividends. Marriott declared a dividend of $0.30 in 1Q17. Marriott management noted that investors can expect another $6.9 billion–$7.8 billion through share repurchases in the next three years.
Investors can gain broad-based exposure to Marriott by investing in the PowerShares Russell Top 200 Pure Growth Portfolio ETF (PXLG), which holds 2.1% of its portfolio in the company.