Wyndham Worldwide Raises Dividend 16% - Now What?

Back on October 28th I recommended hotel giant Wyndham Worldwide Corporation (NYSE: WYN), staying that it was "a great time to buy" for income-minded investors. My reasoning was that even if there wasn't much top line growth ahead for this name, a historically low valuation, a solid dividend and double-digit dividend growth would make this investment more than worth your while. Sure enough, in its latest conference call Wyndham announced a 16% dividend hike, from 50 cents per quarter to 58 cents.

Courtesy of Google Finance.
At that time Wyndham was at just $63 per share and the dividend at that time yielded 3%. Today shares are at about $85 and the dividend yields 2.35%. That "historically low" valuation has changed, and I believe the situation has changed as well. This article takes a look at Wyndham's full-year 2016 results, its guidance for 2017, and its valuation.
Gone flat
The big picture with Wyndham is this: The top line was pretty much flat in 2016, but earnings per share are going steadily higher, by high single digits this year. This dichotomy is because of very good expense management and, perhaps moreso, a comprehensive share buyback program, which has meaningfully shrunk the share count.
Over full year 2016, revenue inched up by 1%, net income was even, and diluted EPS jumped by 8%, with adjusted, diluted EPS growing by a whole 13%. Wyndham is broken up into three business divisions: hotels, vacation rentals and time... Read more

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