Anticipated Outperformance: This Equity with Dividends is Expected to Surpass the Market in the Following Five Years
Marriott International's Second-Quarter Results Show Robust Growth
Marriott International, the renowned hospitality company, has reported strong results for the second quarter of the year. The company's adjusted earnings per share rose by 6%, while its revenue increased by 6% year over year, totaling over $1.8 billion.
One of the key drivers of Marriott's growth is the expansion of its Marriott Bonvoy loyalty program. The number of Bonvoy members increased by 18% year over year, totaling 248 million in the second quarter. This growth was particularly significant, with 69% of rooms booked globally by Marriott being from Bonvoy members. In the U.S. and Canada, the penetration of the Bonvoy loyalty program was even higher, with 74% of rooms booked being a part of the program.
Marriott's co-branded credit card fees also saw a rise of about 10% year over year in the second quarter. This growth, coupled with the increase in Bonvoy members, contributes to the durability of the company's growth story.
In addition to its loyalty program, Marriott has formed strategic partnerships with companies such as Uber and Starbucks to deepen relationships with its members and capture a greater share of their wallet. The company has also entered into a partnership with Miles & More, the Lufthansa Group’s frequent flyer program, enabling mutual loyalty benefits such as earning frequent flyer points for hotel stays and automatic status matches that enhance member advantages and deepen customer relationships.
Marriott's capital return program includes share repurchases, in addition to the dividend. The company is projected to return about $4 billion to shareholders via repurchases and dividends during 2025. Marriott's dividend yield is more than 1%, making it an attractive investment for income-focused investors.
Despite these positive developments, there are risks that investors should be aware of. There is a risk that if the company's momentum in its loyalty program tapers off, investors could become convinced that Marriott's strategic efforts to enhance the program may have its highest-impact days in the rearview mirror. Additionally, any decline in global interest in traveling could adversely impact Marriott International.
As of this writing, Marriott International's shares have decreased almost 7% year to date. However, the company's growth story is backed by a handful of catalysts with great momentum, making it a good dividend stock for investors to consider, especially if many AI stocks see their valuations come down in the coming years. Marriott's stock has a reasonable price-to-earnings ratio in the high twenties, even with the risks in mind.
In conclusion, Marriott International's second-quarter results showed growth in both revenue per available room (RevPAR) and total rooms available, leading to robust top and bottom-line growth. The company's expansion of its Marriott Bonvoy loyalty program, net rooms growth, and co-branded credit card fees contribute to the durability of the company's growth story. Despite the risks, Marriott International remains a good dividend stock for investors to consider.
