Skip to main content
number cruncher

What are we looking for?

Sustainable dividends from hotel and leisure stocks spurred by rebounding travel.

The screen

Cruise giant Carnival Corp. said its booking activity on Monday nearly doubled reservations on the same day in 2019 – pre-COVID-19. This week’s jump came after the company eliminated pre-cruise testing requirements for vaccinated guests. It will now also permit unvaccinated guests who test negative to embark. Other cruise lines are following suit.

Travel was already rebounding as the pandemic eases. Corresponding easing of vaccination and other mandates by governments and the private sector should further spur demand not only for cruise vacations (cruise operators continue to suspend dividends in order to conserve cash), but also for hotels, timeshares and more.

We’re using our TSI Dividend Sustainability Rating System to find sustainable-dividend payers among today’s top hotel and leisure firms. The 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 non-cyclical 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 is 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

Dividend-paying stocks from the leisure rebound

Ranking*CompanyTickerDiv. Sustain. RatingPointsDiv. Yld. (%)Mkt. Cap. ($ Mil.)**1Y Ttl. Rtn. (%) Recent Price ($)**
1Host Hotels & Resorts Inc.HST-QAbove Average82.513,955.126.319.35
2InterContinental Hotels Group PLC (ADR)IHG-NAbove Average82.111,602.40.562.13
3Apple Hospitality REIT Inc.APLE-NAbove Average73.53,950.318.917.15
4Travel + Leisure Co. TNL-NAbove Average73.44,021.4-6.447.10
5Wyndham Hotels & Resorts Inc.WH-NAbove Average71.86,493.23.071.08
6American Hotel Income Properties REIT LPHOT.UN-TAverage66.3285.9-12.13.57
7Marriott International Inc. MAR-QAbove Average80.753,950.025.5163.57
8Choice Hotels International Inc.CHH-NAbove Average70.86,761.45.6121.22

Source: TSI Network.

*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements. **Share price and market cap are in native currency

Our TSI Dividend Sustainability Rating System generated six stocks:

Wyndham Hotels & Resorts Inc., headquartered in Parsippany, N.J., is a leading global hotel franchiser. New York-based Travel + Leisure Co. is one of the largest vacation-ownership/timeshare and exchange companies. Vancouver’s American Hotel Income Properties REIT owns premium hotel properties in the United States. Britain’s InterContinental Hotels Group PLC (IHG) operates hotel brands Crowne Plaza and Holiday Inn. Host Hotels & Resorts Inc., headquartered in Maryland, owns luxury and ultra-high-end hotels in the U.S. And Virginia-based Apple Hospitality REIT Inc. holds a diverse portfolio of upscale U.S. hotels.

One final note: International hoteliers Marriott International Inc. and Choice Hotels International Inc., both headquartered in Maryland, have strong prospects going forward, but their current very low dividend yields won’t satisfy the needs of income investors.

We advise investors to do additional research on any investments we identify here.

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe