Dividend yield is calculated as a company’s annual dividend per share divided by the current market price of its stock. In other words, it helps determine how much you will earn for per dollar you’ve invested in a stock. A dividend could be the only return you see on a stock if its price doesn’t rise.
The indicated dividend yield is the dividend for the next four quarters divided by the current market price. It gives you a better indication of future earnings.
On July 21, 2017, Wyndham Worldwide (WYN) had a closing price of $103.1 and an indicated dividend yield of 2.3%, the highest among its peers. Marriott International (MAR) had an indicated dividend yield of 1.3%, and Hilton Worldwide (HLT) had an indicated dividend yield of 0.96%. Peer Hyatt Hotels (H) doesn’t pay dividends.
Cash dividend ratio
At the end of 1Q17, Wyndham had a cash dividend ratio of 2.8x. Wyndham has paid dividends since 2007. A cash dividend ratio of greater than 1 indicates that a company can continue paying dividends for the foreseeable future. It’s calculated as income before extraordinary items and minority share divided by total dividends paid.
Can dividend payouts increase?
Wyndham has consistently increased its dividend payouts in the first quarter of every financial year. True to this trend, it increased its dividend payout by 16% to $0.58 per share in 1Q17. Investors can expect the company’s dividend payout to remain at this level for the next three quarters.
Investors can gain exposure to Wyndham Worldwide by investing in the PowerShares DWA Consumer Cyclicals Momentum ETF (PEZ), which holds 3.6% in the stock.