Travel + Leisure Co (NYSE:TNL) Emerges as a Strong Dividend Pick with Solid Yield and Financial Health

Travel + Leisure Co (NYSE:TNL) stands out as an option for dividend investors after meeting a screening process aimed at finding stocks with solid dividend traits while keeping financial health and profitability in check. The screening approach, detailed in ChartMill’s Best Dividend Stocks filter, focuses on three main metrics:

• Dividend Rating ≥7: Combines good yield, manageable payout ratios, and steady dividend growth.
• Profitability Rating ≥5: Shows the company earns enough to sustain its dividend.
• Health Rating ≥5: Checks solvency and liquidity to filter out financially weak firms.

These standards help investors steer clear of high-yield risks—companies with payouts they can’t maintain—while highlighting businesses likely to keep and increase dividends over time.

Dividend Strength: Yield, Growth, and Sustainability

Travel + Leisure Co’s Dividend Rating of 7/10 shows a balanced mix:

• Yield: At 3.79%, TNL’s yield is higher than 86% of its competitors in the Hotels, Restaurants & Leisure sector and above the S&P 500 average of 2.39%. While not the top yield, it’s stable rather than risky.
• Growth: The dividend has increased by 2.47% yearly over the past 10 years, with no reductions in the last three years. Growth is slower than some peers, but consistency is a plus.
• Payout Ratio: TNL uses 37% of its earnings for dividends, far below the risky 80+% level. This allows for reinvestment and protection against earnings swings.

The company’s 10-year dividend track record further highlights its reliability, a key factor for income-focused investors.

Profitability and Valuation: Supporting the Dividend

TNL’s Profitability Rating of 5/10 signals decent earnings strength:

• Margins: Operating margins of 19.8% beat 79% of industry peers, while ROIC (10.8%) and ROA (5.8%) are also strong.
• Earnings Stability: TNL has been profitable in 4 of the past 5 years, with positive operating cash flow each year.

The stock also looks cheap compared to peers:

• A P/E of 10.0 is lower than 95% of the industry and well below the S&P 500’s 26.7.
• Forward P/E of 8.4 hints that expected earnings growth (14.2% yearly) isn’t fully reflected in the price.

Financial Health: Liquidity Balances Debt Risks

With a Health Rating of 6/10, TNL has some risks but manages them well:

• Liquidity: Strong current (3.71) and quick (2.70) ratios put TNL in the top 5% of the industry for short-term financial flexibility.
• Debt: A high debt-to-FCF ratio (11.3 years to repay) is a worry, but better leverage over the past year and share buybacks (reducing outstanding shares) show active balance sheet management.

Conclusion

Travel + Leisure Co makes a strong case for dividend investors looking for a mix of yield, stability, and fair valuation. Its track record of maintaining payouts through ups and downs—backed by healthy margins and liquidity—fits the screening goal of finding reliable income sources.

For investors wanting to find similar options, the Best Dividend Stocks screener provides a filtered list of high-rated picks.

Disclaimer: This analysis is not investment advice. Investors should do their own research or consult a financial advisor before making decisions.