4 Hotel REITs With Huge Dividend Increases In 2023

Investors love dividend increases, both for the extra income generated as well as what they convey about the company's overall health. Dividend raises signal to shareholders that the company is experiencing growth in revenue and earnings, demonstrating its ability to pay out higher returns to its investors.

Every so often, events occur that force companies to suspend or drastically cut the dividend. This often leads to a sell-off of the shares. In 2020, hotel real estate investment trusts (REITs) suffered huge declines in revenue per available room (RevPAR) as COVID-19 crushed the number of hotel reservations and many REITs were forced to cut or suspend their dividends.

But by 2022, RevPAR began making a comeback, and hotel REITs were able to reinstate small quarterly dividends. With RevPAR growing further in 2023, several hotel REITs have greatly expanded their dividend payouts.

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Take a look at four hotel REITs that have initiated huge dividend increases in 2023 and whose payout ratios still provide the potential for more increases in 2024.

Ryman Hospitality Properties Inc. RHP is a Nashville, Tennessee-based hotel REIT that specializes in large upscale convention center resorts and entertainment venues. Its portfolio of nine hotels includes over 11,400 rooms and more than 3 million square feet of meeting space. Ryman also has a 70% controlling ownership interest in Opry Entertainment Group, which owns the Grand Ole Opry and other entertainment attractions.

COVID-19 forced Ryman to suspend its $0.95 quarterly dividend after the March 2020 payout, and the dividend was reinstated at $0.10 per share in September 2022. The December 2022 payout was then raised to $0.25 per share.

But Ryman has brought back the dividend with even more vigor in 2023, increasing it to $0.75 in March and then another hike to $1 for June and September. That's a 300% increase in total. The present annual yield is 4.03%, but with a payout ratio of only 40%, Ryman investors could see another dividend increase in December, or more likely sometime in 2024.

RLJ Lodging Trust RLJ is a Bethesda, Maryland-based hotel REIT that owns 96 premium-branded hotels with 21,200 rooms across 23 states and Washington, D.C. Its brands include Marriott, Hilton Garden Inn, Embassy Suites and Hyatt.

To its credit, RLJ Lodging never suspended its dividend during the pandemic in 2020, but a drastic cut from $0.33 to $0.01 per share in March 2020 coincided with a 75% decline in its share price. The dividend was finally increased to $0.05 per share for both the September and December 2022 payments.

In 2023, RLJ raised the dividend to $0.08 in March and then to $0.10 in September, for a total increase of 100%. Its forward funds from operations (FFO) payout is still only 24.8%, leaving plenty of room for further increases to come. The present annual yield is 3.76%.

Summit Hotel Properties Inc. INN is an Austin, Texas-based hotel REIT that partly or wholly owns 101 assets with 15,035 rooms in 24 states. The Marriott and Hyatt Hilton brands account for 95% of its portfolio.

Summit suspended its $0.18 quarterly dividend after February 2020 and reinstated it at $0.04 per share in August 2022. In May 2023, it hiked the dividend payment by 50% to $0.06 per share, and it has remained at that level for the last three quarters. But with a meager payout ratio of only 27.9%, it would not be surprising to see the quarterly dividend lifted again in 2024. The present dividend yield is 3.78%. 

Host Hotels & Resorts Inc. HST is the largest lodging REIT and one of the largest owners of luxury and upper-upscale hotels. The company owns 77 properties with 42,000 rooms across the United States. Host Hotels is the only lodging REIT member of the S&P 500.

Host Hotels suspended its quarterly dividend of $0.20 per share after March 2020 but reinstated it at $0.03 per share in March 2022. Host then increased the dividend to $0.06 in June and $0.12 in September 2022. In December, it declared a special dividend of $0.20 per share to bring the total fourth-quarter dividend to $0.32.

In June 2023, Host raised the quarterly dividend from $0.12 to $0.15 per share and increased it once more to $0.18 per share in September. The total dividend growth for 2023 was 50%. The increase was initiated despite a loss of $5 million in net income and hotel earnings before interest, taxes, depreciation and amortization (EBITDA) from its Maui, Hawaii, hotels after the fires.

Host Hotel's resiliency and commitment to rewarding its shareholders is apparent, and with a 37.3% payout ratio, another dividend increase could be on the way, either in December or sometime in 2024. The $0.72 annual dividend presently yields 4.09%.

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