This Little-Known REIT Has One of the Best Dividends in the Industry
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Ryman Hospitality Properties (NYSE: RHP) is among the least known stocks in the market. Ryman is a small cap lodging REIT firm, with a market capitalization of $1.77 billion. Its P/E ratio of 82.88 is well above the P/E ratio of the S&P 500 at 18.7. However, its price to cash flow ratio of 16.3 is enough to cover the current dividends. The stock offers a substantial yield of more than 5%, which is very attractive for income investors.
Ryman is currently trading about 25% below its peak valuation. This is bad news for short-term traders who were looking for quick gains from share performances. However, for dividend investors, this is an excellent opportunity to secure a good position in this high-yielding dividend REIT stock.
At the current price level, Ryman is undervalued. This is given the fact that Ryman has several premiere properties that are expected to fuel its growth. It has four prime leisure properties under its asset portfolio. These are the Gaylord Opryland Resort, the Gaylord Texan Resort, the Gaylord National Resort, and the Gaylord Palms Resort. All of these upscale resorts are managed by Marriott International (NYSE: MAR) under the Gaylord brand.
These hospitality properties mainly target group bookings, comprising about 80% of its occupancy. The remaining 20% are transient business bookings. The total number of rooms at the four prime resorts is 7,795.
Market outlook for Ryman
Despite Ryman share's recent slump, there are many reasons to remain optimistic. Ryman was able to increase the gross advance group bookings for all future periods by 58%, at 587,682 rooms. However, the company also reported group cancellations of 30,100 rooms, up from only 8,817 over the same period last year. Nevertheless, net group bookings for all future periods still grew by 48% at 454,857 rooms.
Ryman’s transient room night bookings also increased to a record first quarter performance at 18,657 rooms. This was mainly fueled by the rewards program of Marriott, as well as the transient delivery channels.
The sales channels of Marriott contributed to 17% of the first quarter production. This is a good sign of the newly-formed partnership with a veteran in the hotel industry. This is another reason to be optimistic for Ryman. Aside from tapping on the expertise of Marriott in hotel management, it also took advantage of its sales channels. This will potentially give Ryman a competitive edge over its peers.
Ryman Hospitality versus its peers in the leisure industry
Ryman Hospitality is not the only one that took a beating on the trading floor. Even some of Ryman's major peers in the leisure industry also suffered the same fate. These are major players, and their recent plunge pulled down the entire leisure industry.
A business partner and peer at the same time
Marriott is a well diversified lodging company with numerous brands under 7 major categories. Some of its famous brands are The Ritz-Carlton, Marriott Hotels & Resorts, Renaissance Hotels, Courtyard, and Fairfield, among others. Ryman's Gaylord Hotels is the latest addition to the brands under Marriott's wing.
Marriott has more than 3,700 properties across the world, in over 74 countries. It is a large company with a market capitalization of $12.4 billion. Its P/E ratio is 21.94. Marriott currently yields at 1.67% with annualized dividend of $0.68 per share. But just like Ryman, Marriott shares slid for the month of May and June but still ended with positive year-to-date growth.
Attractive yield with good YTD share performance
Wynn Resorts (NASDAQ: WYNN) owns three luxurious hotels: the Wynn Las Vegas, the Encore, and the Wynn Macau. Among the three, the Wynn Las Vegas casino resort is the biggest. It is also strategically located along the Las Vegas Strip with 2,715 luxurious suites and guest rooms. One of the unique hotel facilities is the in-hotel Ferrari and Maserati showrooms. It has an on-site 18-hole golf course, as well.
Similar to Marriott, Wynn Resorts is a large company with solid market capitalization of $13.4 billion. Its P/E ratio is 23.9. Wynn is an attractive dividend stock with annualized dividend of $4 per share, and yields at 2.9%. In contrast to Ryman and Marriott, Wynn shares only dropped slightly during the past few weeks. The stock has performed positively so far in this year
Good dividend yield with remarkable growth in shares
Starwood Hotels & Resorts Worldwide (NYSE: HOT) is a high-end hotel company with 9 unique lifestyle brands. It has established a global footprint across 100 countries with approximately 1,146 properties. Over the past 5 years, it has almost doubled its worldwide presence. This makes Starwood one of the fastest growing hotel companies today.
Among its famous brands are W Hotels, Le Meridien, Westin Hotels, and Sheraton. Starwood is also a large-cap company with strong market capitalization of $12.8 billion. Its P/E ratio is 20. Starwood currently yields at 1.87% with a annual dividend of $1.25 per share.
Starwood shares were up during the first 3 weeks of May, but retreated back recently. Nonetheless, Starwood shares have still managed to post satisfactory growth year-to-date.
Compared to its peers, Ryman has the most attractive dividend yield. While its recent performance in the stock market caused some concerns among investors, the outlook is optimistic. Its recent shift to the REIT model seems like an excellent strategy. This is on top of its new partnership with Marriott.
Ryman is not only involved in ownership of leisure properties. It also owns various assets in media and entertainment sectors. This includes but is not limited to the Grand Ole Opry, the WSM-AM radio, and the famous Ryman Auditorium. Its diversification strategy further puts the company on a more stable ground.
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Nur Tarkak has no position in any stocks mentioned. The Motley Fool owns shares of Ryman Hospitality Properties . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!