Royal Caribbean Raises Dividend 50%: Is Cash Flow Strong Enough?

Royal Caribbean Cruises Ltd. RCL recently announced a hike in the quarterly dividend payout. The company raised the dividend by 50%, signaling strong confidence in cash flow and business stability. The dividend increase reflects the continued strength of the business and momentum across the global vacation portfolio.

RCL increased the quarterly dividend to $1.50 per share, or $6 on an annual basis, from the earlier payout of $1.00 per share, or $4 annually. The higher dividend will be paid on April 3, 2026, to shareholders on record as of March 6, 2026. Based on the closing price of $347.30 on Tuesday, the stock offers a dividend yield of 1.73%.

The dividend increase highlights the company’s focus on strengthening shareholder returns. A steady rise in payouts often supports the stock price and improves investor confidence. Investors generally prefer return-generating stocks, and companies with consistent and rising dividends tend to attract income-focused buyers and retain long-term holders.

The action also points to healthy operating trends. Cruise demand has remained firm across key markets, supported by strong bookings and steady vacation spending. Better cash generation from operations is likely to provide room for higher capital returns without pressuring the balance sheet.

At the same time, the company continues to invest in fleet upgrades, new experiences and network expansion. This balance between growth spending and shareholder rewards remains important for long-term performance.

Factors Supporting RCL’s Dividend Hike

Shares of Royal Caribbean have gained 31.9% in the past three months compared with the Zacks Leisure and Recreation Services industry’s 9.9% growth. The company has been benefiting from a strong demand environment and robust booking trends. Resilient pricing and healthy load factors across future sailings bode well. Royal Caribbean emphasized investing in the digital front, fleet expansion, private destination portfolio and guest experience to drive growth.

For 2026, Royal Caribbean expects strong financial momentum, with revenues projected to grow at a double-digit rate, driven by capacity growth of nearly 6.7% and net yield improvement of 1.5% to 3.5%. Adjusted earnings per share are guided between $17.70 and $18.10, indicating about 14% year-over-year growth, while operating cash flow is expected to exceed $7 billion.

RCL’s Zacks Rank & Key Picks

Royal Caribbean currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Zacks Consumer Discretionary sector are Flexsteel Industries FLXS, American Public Education APEI and Adtalem Global Education Inc. ATGE.

Flexsteel currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here. 

The company delivered a trailing four-quarter earnings surprise of 53.1%, on average. FLXS stock has gained 33% in the past three months. The Zacks Consensus Estimate for Flexsteel’s fiscal 2026 sales indicates growth of 5.6%, while the earnings per share (EPS) estimate points to a 1.9% decline from the year-ago level.

American Public Education currently sports a Zacks Rank of 1. The company delivered a trailing four-quarter earnings surprise of 173.7%, on average. APEI stock has gained 42.5% in the past three months.

The Zacks Consensus Estimate for American Public Education’s 2026 sales and EPS implies growth of 7.1% and 106.5%, respectively, from the year-ago levels.

Adtalem currently has a Zacks Rank of 2 (Buy). The company delivered a trailing four-quarter earnings surprise of 64.5%, on average. GIII stock has gained 9.3% in the past three months.

The Zacks Consensus Estimate for Adtalem’s fiscal 2026 sales and EPS implies growth of 7.6% and 18%, respectively, from the year-ago levels.

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This article originally published on Zacks Investment Research (zacks.com).

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