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What are we looking for?

Sustainable dividends from airlines flying high – with even more gains on the horizon.

The screen

Alaska Air Group Inc.’s US$1.9-billion takeover bid for Hawaiian Holdings Inc. (the parent of Hawaiian Airlines) has moved air travel back into the spotlight.

COVID-19 threatened to ground the airline industry almost four years ago, but today pent-up demand continues to spur its recovery and gains. In fact, airline revenues in 2024 are projected to surpass the prepandemic high set in 2019.

The prospect for growth remains bright despite the kind of economic uncertainty that historically zaps consumer demand for air travel. Moreover, the industry’s top dividend-paying airlines are in a great position to share their gains with investors.

Our search started with airlines offering solid revenue growth but also dividends. We then applied our TSI Dividend Sustainability Rating System, which awards points to a stock based on key factors:

  • one point for five years of continuous dividend payments – two points for more than five;
  • two points if it has raised the payment in the past five years;
  • one point for management’s commitment to dividends;
  • one point for operating in non-cyclical industries;
  • one point for limited exposure to foreign currency rates and freedom from political interference;
  • two points for a strong balance sheet, including manageable debt and adequate cash;
  • two points for a long-term record of positive earnings and cash flow to cover dividends;
  • one point if the company is an industry leader.

Companies with 10 to 12 points have the most secure dividends or the highest sustainability. Those with seven to nine points have above-average sustainability; four to six points, average sustainability; and one to three points, below average sustainability.

More about TSI Network

TSI Network is the online home of The Successful Investor Inc., the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Dividend-paying airline stocks

Ranking*CompanyTickerDiv. Sustain. RatingPointsDiv. Yld. (%)Mkt. Cap. (US$ Bil.)1Y Ttl. Rtn. (%) Recent Price (US$)
1Southwest Airlines Co.LUV-NAbove Average82.616.2-29.527.99
2Delta Air Lines Inc.DAL-NAbove Average81.024.28.438.94
3Singapore Airlines Ltd. (ADR)SINGYAbove Average76.114.012.89.16
4Copa Holdings S.A. CPA-NAbove Average73.44.112.396.99
5Allegiant Travel Co.ALGT-QAbove Average73.31.3-4.772.53

Source: Dividend Advisor.

*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements.

Our TSI Dividend Sustainability Rating System generated five stocks: Delta Air Lines Inc. DAL-N, which is headquartered in Atlanta and flies to major U.S. and global markets; Southwest Airlines Co. LUV-N, whose low fares and focus on short-haul flights make the Dallas-based carrier another industry giant; Allegiant Travel Co. ALGT-Q, which is headquartered in Las Vegas and operates a low-cost passenger airline, linking travellers in small cities to vacation destinations such as Las Vegas, Phoenix and Orlando; Singapore Airlines Ltd. SINGY, that city-state’s national carrier, which also operates discount airline Scoot; and Panama-based Copa Holdings S.A. CPA-N, a Latin American provider of passenger and cargo services that operates in North, Central and South America, as well as the Caribbean.

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 01/03/24 3:55pm EST.

SymbolName% changeLast
LUV-N
Southwest Airlines Company
-0.9%33.96
DAL-N
Delta Air Lines Inc
-0.26%42.16
SINGY
Singapore Airlines L
+0.21%9.58
CPA-N
Copa Holdings S.A.
+0.51%97.97
ALGT-Q
Allegiant Travel Com
-1.1%71.98

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