After Solid Earnings Report, This 6% Yielder Is Going Higher

May. 8.12 | About: Chatham Lodging (CLDT)

I have been positive and have held Chatham Lodging Trust (NYSE:CLDT) since late February. The company reported earnings after the bell on Monday. It was another solid report and it looks like this high yielding REIT still has significant upside.

Key earnings highlights from CLDT's earnings report:

  • FFO per share came in at 21 cents a share, easily beating estimates of 19 cents a share.
  • RevPar was up 12.5% per room Y/Y
  • EBITDA was up 29% Y/Y
  • Announced it was raising distribution payout by 14% to 20 cents a share.

Chatham Lodging Trust is a self-advised REIT that was organized to invest in upscale extended-stay hotels and premium-branded, select-service hotels. The company currently owns 18 hotels with an aggregate of 2,414 rooms/suites in 10 states and the District of Columbia and holds a minority investment in a joint venture that owns 64 hotels with 8,329 rooms/suites.

5 reasons CLDT makes sense for dividend and growth investors at $13 a share:

  • CLDT now yields over 6% after the announced dividend payout increase.
  • 13 of Chatham's 18 hotels were renovated in the last year which contributed to higher RevPar and ADR in the quarter and will continue to do so going forward.
  • Insiders have been net buyers of the shares over the past year, much of the buying at higher than current prices.
  • The company is on track to make significant earnings gains over the next few years. The company made 89 cents a share in FY2011. Analysts currently expect CLDT to earn $1.30 a share in FY2012 and $1.56 in FY2013. I would expect FY2012 and FY2013's estimates to move up slightly after this earnings report.
  • The stock is selling at just 83% of book value, grew operating cash flow by more than 150% from FY2009 to FY2011 and has a low five year projected PEG (.37)

Disclosure: I am long CLDT.