Reuters: Hot Stocks: Choice Hotels shares rise on special dividend plan

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Choice Hotels shares rise on special dividend plan Jun 20th 2012, 15:03 June 20 | Wed Jun 20, 2012 11:03am EDT June 20 (Reuters) - Shares of Choice Hotels International Inc rose as much as 11 percent on Wednesday after the hotel franchiser said it plans to issue notes to fund a $600 million special dividend. Brokerage Robert W. Baird, which upgraded Choice Hotels to "neutral", said the $600 million special dividend implies a payout of about $10 per share. Choice Hotels will issue $400 million worth senior notes due 2022 and will use the proceeds to pay a special cash dividend or for general corporate purposes, the company said in a statement on Tuesday. Choice, which franchises hotels under names such as Comfort Inn, Quality, Econo Lodge and Cambria Suites, is benefiting from a rebound in business and leisure travel that has helped offset the impact of low U.S. construction activity. Baird said the company's franchise-driven business model is attractive as it suits the present uncertain macroeconomic environment. "Should the market again focus on a weak U.S. economic outlook ... we expect Choice's defensive, fee-based business model to attract investors looking for safety," analyst David Loeb wrote in a note. Shares of the company were up 7 percent at $41.14 in morning trade on the New York Stock Exchange.

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