3 Bargain Hotel REITs Paying up to 7%

3 Bargain Hotel REITs Paying up to 7%

The hotel industry is one of the more underappreciated income segments of the market thanks to low-yield big names like Hilton (HLT) and Choice Hotels (CHH) that operate and franchise hotels. Today, we’ll explore the dividend-rich side of hospitality via a trio of hotel REITs (real estate investment trusts) yielding up to 7% that invest in upper-echelon hotel and resort real estate.

The hotel industry is booming as America’s economic recovery continues. In 2016, hotel revenues across the board climbed more than 4% to hit nearly $200 billion – a record high. Meanwhile, STR and Tourism Economics forecast that U.S. hotels will continue chugging up the mountain over the next few years.

Upscale and luxury hotel REITs are particularly well positioned to grab a chunk of the increasing wealth of the affluent class. And being REITs, they will dish the majority of it back to us as dividends.

Here are three hotel-focused REITs that pay sizable yields (up to 7%). Two of them have big upside potential while the third is proof-positive that even a bright industry has a few bad seeds.

Apple Hospitality REIT (APLE)
Dividend: 6.3%

Apple Hospitality REIT (APLE) owns a whopping 235 hotels spanning 33 states and containing 30,000 guestrooms. These properties feature mid-upscale brands across the Hilton and Marriott families – such as Hiltons, Hampton Inns, Embassy Suites, Fairfield Inns, Homewood Suites, Renaissance Hotels and more.

Apple Hospitality REIT is growing like a weed, with its total assets rocketing from $3.7 billion in 2015 to $5 billion last year. And analysts are expecting big things out of Apple Hospitality Trust going forward, including a 26% jump in net income to 96 cents per share in 2017. That could mean a bump to the REIT’s monthly dividend, which was well-funded in 2016 by $1.76 per share in modified funds from operations – an important metric of REIT dividend safety.

Apple Hospitality’s (APLE) Fundamentals Are Heading in the Right Direction

Ryman Hospitality Properties (RHP)
Dividend Yield: 5.1%

Ryman Hospitality Properties (RHP) does more than just typical hotels – it primarily invests in “group-oriented, destination hotel assets.” It’s actually a small base of four properties – “meeting-focused” resorts under the Gaylord Hotels brand, but those four properties combine for just over 7,800 rooms.

The company also owns a small group of “entertainment brands” that include The Grand Ole Opry – yes, that Grand Ole Opry – the Ryman Auditorium, and even an AM radio station, 650 AM WSM.

Ryman’s 80-cent payout represents just 66% of adjusted FFO of $1.22 from the first quarter, an 11% year-over-year improvement on that front. That means plenty of room for RHP to continue its robust dividend growth. Ryman has bolstered its dividend 60% since the company listed on the NYSE in 2012, and in the same time, shares have run 55% higher – double the Vanguard REIT ETF (VNQ).

Ryman Hospitality (RHP) Is Backed by Increasing Strong Financials

Chesapeake Lodging Trust (CHSP)
Dividend Yield: 6.9%

Chesapeake Lodging Trust (CHSP) has the highest dividend of the bunch at nearly 7%, but that’s about all CHSP really has to boast about at the moment.

CHSP targets the upper-upscale segment of the hotel market, and currently holds 22 properties for a total of nearly 6,700 rooms. It includes top city names such as the Hyatt Regency Boston, Le Meridien San Francisco and The Royal Palm-Miami South Beach.

The next couple of years could be difficult for Chesapeake Lodging Trust, which has scaled-back expectations for the next couple of years. Net income is expected to fall from 2016’s $1.13 per share to about 78 cents this year before rebounding, but only to $1.07, in 2018. Yes, CHSP will be able to maintain its 40-cent quarterly dividend with full-year forecast AFFO of $2.15 per share at the midpoint … but that’s a big step back from $2.39 per share in 2016.

Worse, CHSP hasn’t seen a dividend increase since 2015’s September payout.

Chesapeake Lodging Trust has a nice yield, but it’s hard to expect any gains from this dead-weight REIT. Steer clear.

Chesapeake Lodging’s (CHSP) Dividend Is Stuck in Neutral

The Retirement Portfolio You NEVER Have to Touch!

Chesapeake Lodging Trust is the perfect example of a retirement-busting stock. Yes, it’s easy to get drawn in by the nice yield, but if that’s all you’re getting – no dividend growth, and no business growth – then inflation will ultimately erode your income, and you’ll be stuck with an underperforming dud.

Yes, you need big headline yields. But if you hitch your wagon to a high-yield loser, that 8% annual yield can turn into a 4% annual return … or 2%, or 0%, or worse. Those kinds of performances can literally set back your retirement timetable by years!

If you want the retirement you truly deserve, you need a multi-tooled portfolio that not only offers big headline yield, but also dividend growth and the potential for capital gains, too!

You can find these kinds of “triple threat” stocks in my “No Withdrawal” retirement portfolio.

I’ve spent months researching high-yield stocks looking for the ultimate dividend plays that deliver everything we need to build a successful retirement portfolio. I had to weed out numerous value traps and yield traps, but the time was worth it because it resulted in this can’t-miss portfolio featuring:

  • No-doubt 6%, 7% even 8% yields – and in a couple of cases, double-digit dividends!
  • The potential for 7% to 15% in annual capital gains
  • Robust dividend growth that will keep up with (and beat) inflation

These are the three most critical elements for any retirement portfolio, because achieving all three allows you to live off income alone while actually growing your nest egg.

Most pundits that talk about so-called “retirement stocks” will point you in the direction of no-growth blue chips that yield 3%, maybe 4% if you’re lucky. But if you do the math, you won’t like what you see. Think about it: Even if you’ve saved up $500,000 for retirement, 4% annually is just $20,000 a year. You and I both know that even with Social Security tucked in there, that’s not a comfortable retirement.

My “No Withdrawal” portfolio averages 8% across the board right now, but also offers dividend growth that will result in double-digit “yields on cost” over time. That will ensure you have every cent of income so you can pay the bills and have plenty left over to enjoy life. Meanwhile, the growth potential of these picks will help grow your nest egg in retirement, which is essential should you ever need to pay for a big one-time expense, whether it’s an emergency or just buying a vacation home.

This all-star portfolio features the absolute best of several high-income assets, from preferred stocks to REITs to closed-end funds and more. That means diversification and continued payouts regardless of how volatile or bearish the stock market becomes.

Don’t let mediocre yields from uninspired, lazy stock picks ruin the retirement you’ve worked so hard to build. You deserve substantial, regular dividend checks that will let you see the world and live in comfort for the rest of your post-career life.

Let me show you the path to a no-worry retirement. Click here and I’ll provide you with THREE special reports that show you the path to building a “No Withdrawal” portfolio. You’ll get the names, tickers, buy prices and full analysis of their wealth-building potential!

About Author

Brett

Hi, I’m Brett Owens – and I’m a financial junkie. My “problem” started incollege, when I got a little dose of the stock market – man, was I hooked…in no time, I was reading the Wall Street Journal religously.

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