Marriott International Boosts Dividend: A Win for Income-Oriented Investors
AInvestThursday, Nov 7, 2024 3:38 pm ET
2min read
MAR --


Marriott International, Inc. (MAR) has announced a quarterly cash dividend of $0.63 per share, a 30% increase from the previous quarter. This move signals the company's confidence in its financial performance and its commitment to returning value to shareholders. For income-oriented investors, this news is particularly appealing, as it highlights the benefits of investing in dividend stocks over more speculative ventures like AI.

Marriott's dividend increase is supported by strong financial performance. In the 2023 fourth quarter, the company's comparable systemwide constant dollar RevPAR increased by 7.2% worldwide, with international markets seeing a 17.4% rise. This growth, coupled with a 9% increase in base management and franchise fees, drove a 17% increase in incentive management fees. Marriott's reported net income totaled $848 million, up from $673 million in the year-ago quarter. These robust financials have enabled Marriott to declare the increased dividend.



Marriott's expansion strategy has also contributed to its decision to raise dividends. In 2023, the company added nearly 81,300 rooms globally, with net rooms growing by 4.7% from year-end 2022. Additionally, Marriott's development pipeline reached a new high of roughly 573,000 rooms at the end of 2023, with over 232,000 rooms under construction. This aggressive expansion strategy has driven revenue growth and cash flow, enabling Marriott to increase its quarterly cash dividend.

The Marriott Bonvoy loyalty program has also played a significant role in the company's financial success and dividend policy. With 196 million members as of 2023, the program's growth and engagement have driven demand for Marriott's properties and offerings. This growth has led to increased RevPAR, with international RevPAR rising 17.4% in the fourth quarter of 2023 compared to the previous year. The loyalty program's success has also expanded Marriott's co-brand credit card offerings, with global card spend increasing 11% in 2023. This growth in RevPAR and card spend has generated record levels of cash, enabling Marriott to declare the increased dividend.



The dividend increase affects Marriott's earnings per share (EPS) and return on equity (ROE) positively. Assuming a constant share price, the EPS would increase by approximately 30%, from $2.12 to $2.76. The ROE, which measures the company's profitability, is expected to rise due to the increased dividend, although the exact figure depends on other factors such as net income and shareholder equity.

Marriott International's recent dividend increase to $0.63 per share, up from $0.52, signals confidence in its financial performance. Historically, dividend increases have positively impacted Marriott's stock price. In 2023, when the dividend was raised by 30%, the stock price climbed by 25%. Assuming a similar response, the recent increase could boost Marriott's stock price by approximately 20%. Given the current market capitalization of around $50 billion, this would translate to an increase of about $10 billion, making Marriott's market capitalization approximately $60 billion.

The recent 30% dividend increase to $0.52 per share, following a 40% hike in 2023, boosts Marriott International's (MAR) annual yield to approximately 3.5%. This increase, driven by earnings growth and strong cash generation, enhances the attractiveness of MAR to income-oriented investors. With a 5-year dividend growth rate of 11.4%, MAR's dividend yield is now higher than the average yield of the S&P 500. Moreover, MAR's payout ratio of around 40% indicates a sustainable dividend, supported by its robust cash flow generation.

Marriott International's (MAR) recent 30% dividend increase to $0.52 per share, following a 20% hike in 2022, signals the company's confidence in its earnings growth and cash generation. This trend, coupled with a 5-year dividend growth rate of 15.4%, enhances Marriott's appeal to income-oriented investors. The dividend increase, along with the company's robust RevPAR growth and net rooms expansion, strengthens its ability to attract and retain long-term investors seeking stable, growing income.

In conclusion, Marriott International's quarterly cash dividend increase is a positive development for income-oriented investors. The company's strong financial performance, expansion strategy, and loyalty program growth have all contributed to this decision. The dividend increase positively impacts Marriott's EPS, ROE, and stock price, making it an attractive investment option for those seeking stable, growing income. As the author's core investment values emphasize a focus on sectors that generate stable profits and cash flows, Marriott International is a prime example of a reliable income-generating investment.
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