The Best of the Best Monthly Dividend Stocks: Chatham Lodging Trust (CLDT)

How Has Chatham Lodging Trust Performed?

One of the key performance metrics for lodging REITs is the occupancy rate. Obviously, higher is better and CLDT’s occupancy rate is one of the best.

Source:  Chatham Lodging Trust Investor Relations

CLDT’s occupancy rate for the nine month period ending December 31, 2015 was 83.2%, bettering most of its peers.  Historically, CLDT’s occupancy rate has been higher than the US average for all hotels and higher than the average for the upscale hotels. High occupancy is a good start for making money but we have to look at whether CLDT has been able to turn occupancy into earnings.

Source:  Chatham Lodging Trust Investor Relations

Boy howdy, can CLDT turn high occupancy into earnings! CLDT has the highest EBITDA margin compared to all of its peers and by a significant delta. So, CLDT can generate earnings, but how fast have they been growing those earnings?

Source:  Chatham Lodging Trust Investor Relations

Indeed, CLDT can also grow their earnings and cash flow better than most of their peers.  The chart above shows the compound annual growth rate (CAGR) of funds from operations (FFO) for CLDT and its peers.  CLDT’s FFO is not the highest but it is a very healthy 27%. The chart below provides a little more granularity on CLDT’s FFO growth including the fourth quarter of 2015 and CLDT’s estimated 2016 FFO.

CLDT continues to grow its FFO. By the end of 2016, CLDT’s FFO CAGR will have be a very healthy 23%. A growing FFO is key to being able to grow dividend distributions and CLDT has not disappointed investors with its dividend payments.

Source:  Author

CLDT’s dividend growth has been excellent at an annual rate of 13.5%. CLDT has a maintained a relatively low and conservative FFO payout ratio of about 50%. As of May 19, 2016, CLDT’s dividend is $1.32 per year providing a yield of 6.4%. Not bad in today’s low interest rate environment.