Summit Hotel Properties Maintains Steady Dividend Amid Hotel Market Recovery

Summit Hotel Properties (NYSE: INN) has announced its first quarter 2025 dividend, maintaining the $0.08 per share payout for common stockholders, consistent with its Q4 2024 distribution. The dividend, payable on May 30, 2025, underscores the company’s commitment to steady income for investors. With a current dividend yield of 8.2% (based on a $3.88 stock price), INN remains an attractive option for income-focused investors, though its high payout ratio signals a need for sustained operational strength.

Dividend Consistency Amid Recovery

Summit Hotel Properties has prioritized dividend stability since emerging from pandemic-era challenges. Over the past two years, it increased its annual dividend from $0.24 in 2023 to $0.32 in 2024, a 33% rise, reflecting improving hotel performance. The Q1 2025 decision continues this trajectory, with the $0.08 quarterly payout representing four straight quarters of unchanged distributions.

Key Drivers of the Dividend Policy

1. Hotel Sector Recovery:
   Summit’s portfolio of 97 upscale hotels (53 wholly owned) across 25 states has benefited from post-pandemic travel rebound. Full-year 2024 results showed 1.8% RevPAR growth and $192.2M Adjusted EBITDAre, supporting its dividend cover ratio of 1.0, meaning 100% of earnings are distributed.

2. Balance Sheet Strength:
   The company’s conservative leverage and access to liquidity—via its $1.2B unsecured credit facility—provide a buffer against economic volatility. This stability is critical for maintaining payouts, especially as hotel occupancy and rates remain uncertain.

3. Preferred Dividend Structure:
   Alongside common stock dividends, Summit also pays preferred shareholders:

4. Series E (6.25%): $0.390625/share
5. Series F (5.875%): $0.3671875/share
6. Series Z (5.25%): $0.328125/unit
   These instruments attract yield-seeking investors while maintaining capital flexibility.

Yield and Risk Considerations

The 8.2% dividend yield (as of April 23, 2025) is compelling, but it comes with risks. Notably:
- Dividend Cover Dependency: The 1.0 cover ratio leaves no room for error—if earnings dip, payouts may face cuts.
- Volatility Risk: The stock’s yield has swung between 5.3% (August 2024) and 14.5% (April 2025), reflecting share price fluctuations. Investors must monitor macroeconomic trends impacting hotel demand.

Outlook and Catalysts

• Q1 Earnings Release: Due on April 30, 2025, this report will clarify whether RevPAR growth and cost controls are sustaining profitability.
• Portfolio Strategy: Management’s focus on premium-branded hotels (e.g., Marriott, Hilton) in high-demand markets positions INN to capitalize on leisure and corporate travel trends.

Conclusion

Summit Hotel Properties’ decision to hold its dividend at $0.08 per share signals confidence in its operational resilience. With a 3-year streak of annual dividend increases (CADI score of 3) and a portfolio well-positioned in the upscale lodging segment, INN offers a stable income stream for conservative investors. However, the 1.0 dividend cover ratio and reliance on hotel sector recovery mean the dividend’s future hinges on continued occupancy and rate growth.

For now, the 8.2% yield—paired with a diversified real estate portfolio—makes INN a viable play on the U.S. travel rebound. Investors should monitor upcoming earnings and macroeconomic data to assess whether this dividend stability is sustainable long-term.

Final Take: Summit Hotel Properties remains a dividend stalwart in the hotel REIT space, but its success depends on the broader recovery of the hospitality industry.

Data as of April 2025. Past performance does not guarantee future results.