Zacks_Analysts' Blog : Host Hotels Hikes Dividend - Analyst Blog

Host Hotels & Resorts, Inc. (HST), a real estate investment trust (REIT), recently hiked its quarterly cash dividend by 1 cent to 4 cents per share. This translates into a 33.3% increase over the prior dividend, taking the annual dividend yield as of September 19, 2011, to 1.37%. The new dividend will be paid on October 17, 2011, to stockholders of record as of September 30, 2011.

As operations continue to improve, Host Hotels expects to increase the dividend modestly over the next quarter, resulting in a full-year 2011 dividend of about 14-15 cents per share.

Host Hotels has a strong balance sheet that provides the required financial flexibility to aim at high-yielding acquisitions, high ROI (return on investments) capital projects, dividend payouts, and share buybacks. This augurs well for the company’s long-term growth. At the end of second quarter 2011, Host hotels' cash balance stood at $630 million. We believe the company has enough cash and cash equivalents to provide optimum shareholder value.

During the second quarter, the company’s funds from operations (FFO) stood at $210 million or 30 cents per share compared with $151 million or 23 cents per share in the year-earlier quarter. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

Host Hotels is the largest lodging REIT with high-quality lodging assets in geographically diverse locations. Over the years, the company has executed a focused and disciplined long-term strategic plan to acquire high-quality lodging assets in hard-to-replicate areas that have the potential for significant capital appreciation.

Host Hotels currently retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. We are also maintaining our long-term “Neutral” recommendation on the stock. One of its competitors, La Salle Hotel Properties (LHO), also holds a Zacks #3 Rank.