Is Braemar Hotels & Resorts (NYSE:BHR) the Best High-Dividend Penny Stock to Buy Now?

Famous dividend stocks like Coca-Cola Co (NYSE:KO), Altria Group Inc (NYSE:MO) and PepsiCo Inc (NASDAQ:PEP) often get the limelight. But there are some small companies paying high dividends which often slip through the cracks and remain ignored by the market and analysts. We recently covered some of the best high-yield penny dividend stocks to buy according to hedge funds. Brandywine Realty Trust (NYSE:BDN), being a notable name in the REIT industry, deserves special attention.

Braemar Hotels & Resorts (NYSE:BHR)

Number of Hedge Fund Investors: 15

Texas-based hotels and resorts REIT Braemar Hotels & Resorts (NYSE:BHR) is a notable high-yield dividend penny stock hedge funds like. The stock has a dividend yield of about 7%.

In the first quarter, Braemar Hotels & Resorts’ (NYSE:BHR) FFO totaled $0.42, beating Wall Street estimates by $0.07. Revenue inched up about 1.8% year over year to $219.08 million, beating estimates by $8.4 million.

As of the end of the last quarter of 2023, 15 hedge funds reported having stakes in Braemar Hotels & Resorts (NYSE:BHR). Some of the notable hedge funds with stakes in Braemar Hotels & Resorts (NYSE:BHR) are James Dondero’s Highland Capital Management ($8 million stake), Thomas Lenox Kempner’s Davidson Kempner ($5.8 million stake) and Aaron Wertentheil’s Jones Road Capital Management ($3 million stake).

Photo by Annie Spratt on Unsplash

Earlier this month, Braemar Hotels talked about its dividend policy and financials during its Q1 earnings call:

“The vast majority of that restricted cash is comprised of lender and manager held reserve accounts. At the end of the quarter, we also had $23.8 million in due from third-party hotel managers. This primarily represents cash held by one of our brand managers, which is also available to fund hotel operating costs. With regards to dividends, we again announced a quarterly common stock dividend of $0.05 per share or $0.20 per diluted share on an annualized basis. This equates to an annual yield of approximately 7.7% based on yesterday’s stock price.

Our Board of Directors will review the company’s dividend policy on a quarter-to-quarter basis with a view to increasing it as financial performance improves. During the quarter, we extended the loan secured by the Pier House Resort & Spa in Key West, Florida. The loan now has an initial maturity date of September 2025 with one one-year extension option, subject to the satisfaction of certain conditions. Continues to have a balance of $80 million and bears interest at a floating interest rate of SOFR + 3.6%. Additionally, during the quarter, we extended the loan secured by the Ritz-Carlton St. Thomas and St. Thomas, USVI. The loan now has an initial maturity date of August 2025 with one one-year extension option subject to the satisfaction of certain conditions, continues to have a balance of $42.5 million and bears interest at a floating interest rate of SOFR + 4.35%.”