Safe Dividend Stocks for the Next Market Crash: Expedia (EXPE)
EXPE Dividend Yield: 0.9%
5-year Annual Dividend Growth Rate: 16.6%
Expedia Inc (NASDAQ:EXPE) is the world’s biggest travel agency by bookings, courtesy of its portfolio of travel sites including Expedia (of course), Trivago, Egencia, Travelocity, Orbitz, Homeaway, AirAsia and Hotels.com.
Expedia’s large size (thanks to steadily buying its rivals) provides it with a moat that should help it achieve strong revenue growth. Its successful entry into mobile — now representing 45% of its business — should allow it to successfully stave large rivals such as Priceline Group Inc (NASDAQ:PCLN).
Expedia’s long-term growth potential lies in a recent partnership with China’s Ctrip.com International Ltd (ADR) (NASDAQ:CTRP), that means it should be able to diversify away from its core U.S. business (64% of 2016 bookings) as well as achieve nice margin expansion as it leverages its low fixed costs across its portfolio of businesses.
Meanwhile, while EXPE’s dividend growth record is fairly new (dividend payments started in 2010), the company has proven willing to quickly raise the payout. Better yet, because the free cash flow (FCF) payout ratio is a low 18.4%, not only is the dividend highly secure, but the payout’s growth runway is long and steep. Investors should expect 13% to 14% annual dividend growth over the next decade.
EXPE doesn’t yield much, obviously, but this low-volatility stock is an interesting income candidate for growth-oriented investors — and those seeking a safe harbor from a potential market crash.