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Host Hotels & Resorts(HST - Get Report) claims the title of the biggest dividend increase last week, a 50% jump to 3 cents per share. In part, a big reason for the company's ability to increase payouts so much is that it was so small to begin with; even now, a dividend yield of 0.30% is little reason to consider shares in and of itself. But that doesn't mean this stock's investment case should be ignored.
Because of its REIT status, Host is obligated to pay out the vast majority of its income as a distribution to shareholders. While the company was better situated than peers during the height of the recession, its upscale positioning meant that the business still got hit hard. While upscale properties did see a sizable increase in 2009, investors shouldn't forget that the increase came on already discounted high-end room rates, squeezing margins and hammering profitability.
Host has made some major fundamental improvements in the last year, but I still don't like the tenuous nature of its margins. I'd suggest waiting for improved earnings -- and dividend payouts -- before becoming a buyer of this stock.
Host shows up on a recent list of
8 Hotel and Resort Stocks With Upside
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-- Written by Jonas Elmerraji in Baltimore.