Marriott’s Generous Dividend Boost
Marriott International, Inc. (MAR) has recently delighted its investors by announcing a significant 21.2% increase in its quarterly cash dividend payments. The Board of Directors approved a new quarterly dividend payout of 63 cents per share ($2.52 per share annually), up from the previous 52 cents per share ($2.08 per share annually). Shareholders of record as of May 24 will receive this increased amount on June 28, 2024. Remarkably, with the closing price at $240.46 per share on May 10, the stock boasts a dividend yield of 1% and a payout ratio of 0.3%.
Foundations of the Dividend Policy
Marriott’s decision to enhance its dividend offering stems from a robust balance sheet and effective capital allocation strategies. The company’s commitment to identifying growth opportunities that benefit shareholders, along with a focus on modest cash dividends and share repurchases, is central to its capital allocation approach.
Driving Factors Behind the Dividend Increase
Marriott’s dedication to effective capital allocation strategies has been instrumental in supporting its growth agenda. The first quarter of 2024 saw the company reporting adjusted earnings per share (EPS) of $2.13, marking a 1.9% increase from the corresponding period in the previous year. By adhering to its capital allocation philosophy, including a focus on investment-grade ratings and strategic investments in growth prospects, Marriott has been able to drive this positive trend.
Furthermore, the company’s expanding international market demand, strategic expansion endeavors, robust loyalty program, and an asset-light business model have all contributed to Marriott’s business growth. Despite challenges such as high costs and expenses, Marriott’s efforts to harness increased revenue streams and allocate surplus capital to profitable growth opportunities have been paying off.
Notably, Marriott has raised its adjusted EPS outlook range for 2024, now forecasting a range of $9.31-$9.65, up from the previous $9.18-$9.52 estimate. The upward revision is fueled by expected higher incentive management fees from its international regions.
Broader Perspectives and Comparisons
Shares of Marriott, currently a Zacks Rank #3 (Hold) company, have surged by 36.4% over the past year, outperforming the Hotels and Motels industry’s growth of 29.7%. This growth trajectory underscores the positive sentiment surrounding Marriott within the investor community.
Promising Stock Options
In the Consumer Discretionary sector, some promising stocks are worth considering. For instance, Strategic Education, Inc. (STRA) stands out with a Zacks Rank #1 (Strong Buy) designation. STRA has demonstrated an impressive trailing four-quarter earnings surprise of 36.2%, with a 50.2% stock gain in the past year. Anticipated growth in 2024 sales and EPS further enhances STRA’s appeal.
Other notable contenders include Netflix, Inc. (NFLX) and Royal Caribbean Cruises Ltd. (RCL), both sporting a Zacks Rank of 1. NFLX has achieved a 9.3% average earnings surprise over the past four quarters, with an 81.5% stock surge in the last year. RCL, on the other hand, has recorded an 18.3% earnings surprise average, along with an 86.6% stock growth over the same period.
As investors navigate their options, the recent market activity underscores the potential for substantial gains. Making informed decisions based on diverse portfolios will play a crucial role in navigating the complex landscape of financial investments.