What are we looking for?
A sustainable dividend from an airline industry preparing for a surge in Olympic travel, and a surge in summer demand more generally.
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As the world prepares to descend on the French capital for the Olympics, Air France-KLM is ramping up service to Paris. And it's not the only airline to do so: A team of analysts at TSI Networks expects several North American airlines to also be buoyed by summer travel demand, with or without direct service to France.
In fact, the International Air Transport Association predicts airline industry revenues will hit a record $996 billion this year, a 9.7% increase from 2023's strong showing.
Leisure travel to destinations such as Paris has been a big driver of demand growth, but business travel demand has improved steadily this year, just over a year after the WHO declared the pandemic was no longer a global health emergency.
The top dividend-paying airlines are in a particularly good position to share their profits with investors.
Our research began with airlines that offer strong earnings growth and dividends. We then applied the TSI Dividend Sustainability Rating System, which awards points to stocks based on key factors.
1 point for five consecutive years of dividend payments, 2 points for more than five years; 2 points for dividend increases in the past five years; 1 point for management's commitment to dividends; 1 point for operating in a non-cyclical industry; 1 point for limited foreign exchange rate exposure and no political interference; 2 points for a strong balance sheet with manageable debt and sufficient cash; 2 points for a long-term record of earnings and cash flows to cover dividends; 1 point if the company is an industry leader.
Companies with 10-12 points have the most stable dividends and are considered the most sustainable, companies with 7-9 points have above average sustainability, companies with 4-6 points have average sustainability, and companies with 1-3 points have below average sustainability.
More about the TSI network
TSI Network is the online home of The Successful Investor Inc., a group of widely read Canadian investment newsletters from Editor and Publisher Pat McKeough, including the award-winning flagship newsletter, The Successful Investor and TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management.
What we discovered
Airline stocks that offer stable dividends
Ranking*CompanyTickerDividendSustainedRatingPointsDividend Yield (%)Market Cap (USD Million)1 Year Accumulated Revenue (%)Recent Stock Price (USD) 1Southwest Airlines Co.LUV-NAAbove Average82.517,014.1-17.028.43 2Delta Air Lines Inc.DAL-NAAbove Average80.831,995.215.949.58 3Singapore Airlines Ltd. (ADR)SINGYAAbove Average77.114,840.0-13.410.00 4Copa Holdings SA CPA-NAAbove Average76.73,767.0-14.295.56 5Deutsche Lufthansa AG (ADR)DLAKYAAbove Average75.07,742.3-36.66.47 6Allegiant Travel Co.ALGT-Q Above average 74.59 63.6-55.6 52.85
Source: Dividend Advisor
Six stocks were selected by the TSI Dividend Sustainability Rating System. Delta Air Lines (DAL-N), headquartered in Atlanta, serves major markets in the U.S. and around the world. Meanwhile, Southwestern Airlines (LUV-N), headquartered in Dallas, is another industry giant thanks to its low fares and focus on short-haul routes. Allegiant Travel (ALGT-Q), headquartered in Las Vegas, operates a low-cost passenger airline, connecting travelers in smaller cities with destinations such as Las Vegas, Phoenix, and Orlando. Singapore Airlines (SINGY) is the national airline of the city-state, which also operates the low-cost carrier Scoot. Copa Holdings (CPA-N), headquartered in Panama, is a Latin American passenger and cargo service provider. The company serves North America, Latin America, and the Caribbean. And finally, Germany's flag carrier, Lufthansa Deutsche Airlines AG DLAKY, flies around the world under its own brand, but also owns Swiss International Air Lines, Austrian Airlines, Discover Airlines, Brussels Airlines and Eurowings.
Scott Clayton, MBA, is a senior analyst at TSI Network and an associate editor for TSI Dividend Advisor.
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