Host Hotel & Resorts (HST) trades around $14.25 versus its 52-week range of $12.58-$17.57. The stock trades with a EV/EBITDA multiple of 14 times versus an average of 12 times. The stock pays a dividend of 2.4%. Others in its peer group such as Ashford Hospitality Trust (AHT) yields 5.2%, Chatham Lodging (CLDT) yields 5.9%, Chesapeake Lodging (CHSP) yields 4.7%, and Hersha Hospitality (HT) yields 5.3%.
Strong fundamentals support a stable yield payout in Host Hotels:
The company has a strong balance sheet with $290 million in cash & cash equivalents, and $750 million in available borrowing capacity under its credit facility. Host is in compliance with all its financial covenants under the senior notes indenture, and the credit facility agreement.
Host Hotel's portfolio of hotels owned is well diversified among 16 hotel properties in 6 countries. This also provides for the limitation in currency risk.
During Q3-2012, hotel RevPAR was up 7.6% year-over-year, driven by a 4.7% increase in the average daily rate. Additionally, occupancy increased 2.1% to 78.4%.
On September 17th, 2012, the company increased its quarterly dividend to 8 cents per share. This clearly shows the company's dedication to return cash to its shareholders.
The company remains diligent about raising capital. In Q4-2012, the company expects to sell 3 hotels for $300-$400 million.
Risks related to investing in the company remain, currency risk due to its exposure to Europe, and Asia via joint ventures, and a significant slowdown in the economy, which could impact hotel occupancies.
The chart below compares share performance over the past year. "D"s mark dividends paid.
click to enlarge image
Tool provided by Kapitall.