Marriott Vacations Worldwide Corporation VAC recently announced a hike in its quarterly dividend payout. The company raised the quarterly dividend by 16%, which reflects its intention to utilize free cash to boost shareholders’ returns.
The company raised the quarterly dividend to 72 cents per share (or $2.88 annually) from the previous payout of 62 cents (or $2.48 annually). The hiked dividend will be paid out on (or around) Jan 5, 2023, to shareholders on record as of Dec 22, 2022. Based on the closing price of $149.05 per share on Dec 1, 2022, the stock has a dividend yield of 1.7%.
Dividend hikes not only boost shareholders’ returns but also raise the market value of the stock. Companies often attract new investors and retain old ones through this strategy. Year to date (through October 2022), the company has paid more than $600 million to its shareholders in the form of cash dividends and repurchases of common stock.
What’s Driving the Dividend Policy?
Marriott Vacations have been witnessing improvement in occupancy rates, highlighting people’s willingness to go on vacations. During the third quarter of 2022, the company reported solid occupancies with respect to its Aqua-Aston business. The company reported year-over-year growth in occupancies and RevPAR. Also, it reported a solid recovery in domestic markets (Hawaii) and Asia-Pacific. Much optimism prevails as the company noted increasing customer willingness to resume travel.
Marriott Vacations continues to witness robust recovery during third-quarter 2022. While occupancies and tours are witnessing growth in the second quarter, Volume per guest (or VPG) remains well above the 2019 levels. The company reported benefits from its development and rental businesses. VAC reported contract sales of $483 million in the third quarter of 2022, up 27% from $380 million reported in the prior-year quarter. For the fourth quarter of 2022, VAC anticipates contract sales to increase 13% (on a year-over-year basis), backed by an increase in tours and strength in VPGs.
The company is making good progress on the technology needed to link Marriott, Westin and Sheraton products into a single points-based offering. The initiative brings the respective vacation ownership products together, allowing users with more destinations and flexible usage options across the Marriott-branded portfolio.
We believe that the initiatives are likely to strengthen the company’s business and drive the sustainability of its cash flows in the upcoming periods.
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In the past three months, shares of Marriott Vacations have gained 7.3% compared with the Zacks Hotels and Motels industry's 8.4% growth.
Zacks Rank and Stocks to Consider
Currently, Marriott Vacations carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Monarch Casino & Resort, Inc. MCRI, Hyatt Hotels Corporation H and Crocs, Inc. CROX.
Monarch Casino sports a Zacks Rank #1. MCRI has a trailing four-quarter earnings surprise of 9.1%, on average. The stock has gained 24.2% in the past year.
The Zacks Consensus Estimate for MCRI’s 2022 sales and earnings per share (EPS) indicates growth of 21.1% and 29.2%, respectively, from the year-ago period’s reported levels.
Hyatt currently has a Zacks Rank #2. H has a trailing four-quarter earnings surprise of 652.3%, on average. The stock has increased 25.6% in the past year.
The Zacks Consensus Estimate for H’s current financial year sales and EPS indicates a surge of 92.6% and 121.8%, respectively, from the year-ago period’s reported levels.
Crocs currently has a Zacks Rank #2. CROX has a long-term earnings growth rate of 15%. Shares of Crocs have plunged 38.6% in the past year.
The Zacks Consensus Estimate for CROX’s 2022 sales and EPS indicates a rise of 51.5% and 23.7%, respectively, from the year-ago period’s levels.
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