10 Best Dividend Penny Stocks to Buy Now

6. Service Properties Trust (NASDAQ:SVC)

Number of Hedge Funds: 18 (2024Q2)

Share Price as of the Close of September 25: $4.75

Service Properties Trust (NASDAQ:SVC) is a real estate investment trust that owns properties located primarily in the United States. The company has over $11 billion invested in two asset categories, namely hotels and service-focused retail net lease properties.

As of the second quarter of 2024, Service Properties Trust (NASDAQ:SVC) has demonstrated mixed performance across its portfolio. RevPAR for the company saw growth in its full-service and select-service portfolios, particularly in the group and contract segments. However, there was a decline in occupancy in their extended-stay hotels, particularly in hotels in Salt Lake City, Portland, Oregon, and Dallas. The company’s 34 urban hotels saw a 4.1% RevPAR increase. Portfolio-wide and excluding properties under renovation, the company saw RevPAR increasing 1.6% year-over-year, led by occupancy which improved by 1.7 percentage points. Moreover, full-service hotels showed a notable increase in group and contract segment revenues, with RevPAR up by 10.6% and 5.5%, respectively.

Service Properties Trust (NASDAQ:SVC) also has a well-positioned balance sheet with no debt maturities until 2026. It has successfully restructured its debt, executing a $1.2 billion senior notes offering and repaying unsecured notes due in 2025. Its net lease portfolio, representing 44% of its investments, remains strong with a high occupancy rate of 97.3%. This portfolio’s stability is reinforced by the fact that SVC has a diversified tenant base, anchored by an investment-grade rated tenant in BP.

The company announced a quarterly common dividend of $0.20 per share in July, representing a normalized FFO payout ratio of 44%. However, the Cash Available for Distribution (CAD) payout ratio exceeded 100%, but the company expects it to be back under 100% after they get past the third quarter.

At the end of the second quarter, 18 hedge funds had stakes in Service Properties Trust (NASDAQ:SVC), as per IM database, representing a collective worth of $216.86 million.