Choice Hotels International (NYSE:CHH) Will Pay A Dividend Of $0.2875

Choice Hotels International, Inc. (NYSE:CHH) has announced that it will pay a dividend of $0.2875 per share on the 16th of October. This means the annual payment will be 0.9% of the current stock price, which is lower than the industry average.

Check out our latest analysis for Choice Hotels International

Choice Hotels International's Future Dividend Projections Appear Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. However, Choice Hotels International's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 56.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 15% by next year, which is in a pretty sustainable range.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was $0.74 in 2014, and the most recent fiscal year payment was $1.15. This means that it has been growing its distributions at 4.5% per annum over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

Choice Hotels International Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Choice Hotels International has grown earnings per share at 5.6% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Choice Hotels International's prospects of growing its dividend payments in the future.

Our Thoughts On Choice Hotels International's Dividend

Overall, we think Choice Hotels International is a solid choice as a dividend stock, even though the dividend wasn't raised this year. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 2 warning signs for Choice Hotels International (of which 1 is a bit unpleasant!) you should know about. Is Choice Hotels International not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.