Cramer Goes Gaga Over WYN
On the last day of his week-long series on companies that had substantially hiked their payouts, Jim Cramer said that raising dividends is a sign of confidence a company shows on its long-term growth prospects. He said this is the case with Wyndham Worldwide (WYN) that upped its payout by a huge 200% last Wednesday. WYN’s quarterly dividend now stands at $0.12 a share, up from $0.04. The company maintained that it will continue to hike its dividend. According to the estimates, the company will have ample funds to cover its dividends as WYN’s earnings for 2010 and 2011 are likely to be at least three times the current dividend.
According to Cramer, Wyndham Worldwide is also pro-shareholder, as the company has restored its stock buyback authorization, and has about $157 million of buyback remaining. The restoration of this buyback should boost WYN’s share price, Cramer added.
Jim emphasized that WYN is a rather solid company and has been increasing its focus on fee-based businesses. The company has a healthy balance sheet, with $155 million in cash and $870 million in borrowing capacity against roughly $3.5 billion in total debt. Moreover, the environment in the hotel and vacation market is better than one would believe.
