Wyndham Worldwide: Fairly Valued Dividend Play

Wyndham Worldwide (NYSE: WYN), the world's largest hotel company, has enjoyed a surge in share prices of 45% over the past year as the company continued its growth streak (earnings per share grew nearly 10% over the past twelve months) and continued to boost its ROE to new heights (87.53%). Though the run-up in share price makes it a little pricey for value investors, the company's significant competitive advantages, record of consistent dividend raises, and low payout ratio make it a solid option for dividend growth investors.
Competitive Advantages
The company's greatest strength is found in its considerable brand power, with well-recognized brands and dominant market share throughout its different segments:

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An additional positive from the strength of the company's brand is that it creates a high demand for asset-light franchises. Due to the minimal capital investment required, franchises tend to be higher-margin and higher ROIC than owned properties:

Another competitive advantage from its franchises is in its high switching costs due to lengthy required contract terms (15 years minimum) and expensive cancellation fees.
Wyndham's dominant market share and large scale across its segments, particularly in its timeshare and resort businesses, creates a network competitive advantage. With more vacation properties than anyone else in the world, WYN offers its timeshare and loyalty rewards program customers unmatched... Read more

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