Vail Resorts, Inc. Offers Nearly 40% Average Annual Dividend Growth Rate Over Past Seven Years (MTN)
By: Ned Piplovic,
In addition to offering its guests a variety of leisure options and recreational activities, Vail Resorts, Inc. (NYSE:MTN) offered its investors dividend income growth and asset appreciation for a combined total return of more than 30% over the past 12 months.
The company’s share price doubled over the past two years and quadrupled over the past four years. However, despite the high asset appreciation, the company managed to improve its dividend yield to more than 25% above the company’s average yield over the past five years. A crucial factor in keeping pace with the company’s rising share price were consecutive annual dividend payout hikes that averaged more than 35% per year.
Investors interested in adding this high-total-return equity to their portfolio should conduct their due diligence and act before the company’s next ex-dividend date on June 26, 2018. Taking stock ownership prior to the ex-dividend date will ensure eligibility for the next round of dividend distributions on the July 12, 2018, pay date.
Vail Resorts, Inc. (NYSE:MTN)
Based in Broomfield, Colorado, and founded in 1997, Vail Resorts, Inc. operates mountain resorts and urban ski areas. The company operates through three segments — Mountain, Lodging and Real Estate. The Mountain segment operates 11 mountain resorts in Colorado, Utah, the Lake Tahoe area of California and Nevada, Vermont, Canada and Australia. Additionally, this segment operates three urban ski areas in Wisconsin, Minnesota and Michigan. The Company’s resorts offer various winter and summer recreational activities, including skiing, snowboarding, sightseeing, mountain biking, guided hiking, zip lines, children’s activities and other recreational activities. The Mountain segment also offers ski and snowboard lessons, equipment rental and retail merchandise services, dining venues and private club operations. This segment also leases its owned and leased commercial space to third party operators and provides real estate brokerage services. The Lodging segment owns and manages various luxury hotels and condominiums under the RockResorts brand. Additionally, this segment operates other lodging properties and golf courses, as well as provides resort ground transportation services. This segment operates approximately 4,700 owned and managed hotel and condominium units. The Real Estate segment owns, develops and sells real estate properties in and around the company’s resort communities.
The company has advanced its total annual dividend amount nearly 10-fold over the past seven consecutive years. This level of increase translates to an average growth rate of 38.5% per year. However, the company’s current $1.47 quarterly dividend payout is 39.6% higher than the $1.053 quarterly payout from the same period last year. The higher growth rate indicates that the dividend payout increases are keeping pace with the rising share price.
This new quarterly dividend amount converts to a $5.88 annualized payout and currently yields 2.2%. While this yield might seem average compared to yields in other sectors, MTN’s current yield is 27% higher than the company’s own 1.7% average yield over the past five years, as higher than average yields of industry peers. Compared to the 1.9% average yield of the overall Services sector, Vail Resorts’ current 2.2% is more than 13% higher. The company’s current yield also outperforms the 1.38% average yield of the Resorts & Casinos industry segments by 57%, as well as outperforming by 14.4% the 1.89% average yield of only dividend-paying companies in the segment.
The share price reached its 52-week low of $199.09 on July 6, 2017, which was just three weeks into the trailing 12-month period. After bottoming out at the beginning of July 2017, the share price rose with minor volatility and a couple of pullbacks through the end of May 2018. The share price intensified its growth in June and closed on June 8, 2018, at its 52-week high of $275.25. The share price closed on June 11, 2018, at $271.69, which was just 1.2% short of the 52-week high, 32.5% higher than it was one year earlier, 36.6% above its June 2017 low and a remarkable 344% higher than it was five years ago.
The outstanding asset appreciation over the past five years was the main contributor to the company’s outstanding total returns over the past few years. Just over the past 12 months, shareholders received a one-third total return on their investment. The total return over the past three years was 170% and it exceeded 350% over the past five years.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.