What are we looking for?
Sustainable dividends from hotel and leisure stocks spurred by resurgent travel
The screen
Global travel has regained nearly all the ground lost to the pandemic as inflation woes do little to scuttle vacation plans.
In fact, the World Travel & Tourism Council now expects revenue in the global travel and tourism sector to reach US$9.5-trillion in 2023. That’s just 5-per-cent below the record high in 2019, before pandemic lockdowns grounded most leisure travel.
All in all, the rebound has been a big boost to airlines, hotels, cruise lines, online travel brands, time-share operators and more.
We’re looking for top dividend payers among today’s leading hotel and leisure firms. We’ll then apply our TSI Dividend Sustainability Rating System to those with the strongest prospects for continuing growth even if demand in the sector slows. Our system awards points to a stock based on key factors:
- One point for five years of continuous dividend payments, two points for more than five;
- two points if it has raised the payment in the past five years;
- one point for management’s commitment to dividends;
- one point for operating in noncyclical industries;
- one point for limited exposure to foreign currency rates and freedom from political interference;
- two points for a strong balance sheet, including manageable debt and adequate cash;
- two points for a long-term record of positive earnings and cash flow to cover dividends;
- one point if the company’s an industry leader.
Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.
More about TSI Network
TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management.
What we found
Our TSI Dividend Sustainability Rating System generated seven stocks: New York-based Travel + Leisure Co. TNL-N is one of the world’s largest vacation-ownership/time-share companies. Similarly, Wyndham Hotels & Resorts Inc. WH-N, headquartered in Parsippany, N.J., is one of the largest hotel franchisors. Host Hotels & Resorts Inc. HST-Q, based in Maryland, owns luxury and high-luxury hotels in the United States. Richmond, Va.-based Apple Hospitality REIT Inc. APLE-N owns a diverse portfolio of U.S. upscale hotels. British-based InterContinental Hotels Group PLC (IHG) ICHGF holds and operates hotel brands including Crowne Plaza and Holiday Inn. And finally, international hoteliers Marriott International Inc. MAR-Q and Choice Hotels International Inc. CHH-N, both headquartered in Maryland, have strong prospects – but not, given their low yields, for income seekers.
Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.
Scott Clayton