Apple is one of the most well-known names in the world, and CEO Tim Cook is a visionary leader. But Apple Hospitality REIT, a less well-known hospitality company, is the big winner when it comes to stock gains and dividends.
Apple Inc., a star in technology, has strong growth and fair payouts, but this profitable hotel landlord offers much better returns. Here’s why smart people who want to get dividends should buy this tasty choice to Apple stock.
An Empire of Upscale Hotel Properties
One of the biggest groups of high-end hotels in the United States is owned by Apple Hospitality REIT (NYSE:APLE). The company has an impressive list of over 220 hotels under the Hilton, Hyatt, and Marriott names.
Apple Hospitality gives the money it makes from its hotels straight to its shareholders because it is a real estate investment trust (REIT). This one-of-a-kind REIT is ready to be bought because travel is on the rise again and the collection is in a good spot.
Berkshire’s Crown Jewel Can’t Compete with Dividends
Apple Inc. only gives back 0.48 percent a year, but Apple Hospitality gives back a huge $0.96 a share every year. That’s a 5.6% forward dividend return, which is much higher than the average for the S&P 500, which is about 1.8%.
Also, Apple Hospitality’s payout has grown by 57% in the last year. Warren Buffett is a famous investor who loves Apple Inc. stock because it always makes money. That being said, this forgotten hotel landlord clearly has more to offer when it comes to making money.
RevPAR and Profits Soaring Post-Pandemic
Hospitality stocks took a big hit during the COVID-19 crisis, but the recovery has been just as impressive. RevPAR (revenue per accessible room), Apple Hospitality’s main measure of how well a hotel is doing, went up 7% last quarter compared to the same time last year.
In the same way, adjusted profit went up 2.6% yearly to $118.9 million in Q3 2022. Operating income also went up, which shows that ratios and profits are getting better. Even though there is still inflation and a lack of workers, Apple Hospitality is doing well because it focuses on high-value markets and room rates.
Growth Forecasts Sweet as Apple Pie
Analysts think that Apple Hospitality’s sales will grow by over 7.5% in 2023, which is a lot more than the S&P 500’s 4.7% growth prediction. More progress should be made next year, and the top line is expected to grow by more than 6% in 2024.
Apple Hospitality plans to make a net income of between $167 and 189 million in 2023, thanks to rising sales. That means up to 5.4% more money per share than the previous year.
This is an income investor’s dream stock because it has strong profit and yield growth and a business that is protected against inflation.
Gobbling Up New Assets While Ripe for the Picking
In addition to its strong organic success, Apple Hospitality keeps adding to its advantages by buying other companies. In 2022, the business bought five new hotels for a total of $178 million.
Three more hotels will be bought for an extra $114 million in deals that will close in 2023 and 2024. By buying up competition, Apple Hospitality increases its income and solidifies its position as the leader in its field.
The Right Ingredients for Outsized Returns
Apple Hospitality REIT has a high dividend rate of 5.6%, rising profits, and growth. This gives buyers everything they need to beat the market. The company’s large number of assets and careful capital structure help it weather economic storms.
On the other hand, Apple Inc. is a leader in technology but makes less money and isn’t as good at weathering decline. This overlooked landlord of lodgings offers the best possible returns for investors seeking present cash flow and protection against inflation.
Instead of staying with the obvious Apple choice, smart people who want to get dividends should take a big bite out of the share price of Apple Hospitality REIT.