The thought of considering an airline stock as a dividend play is probably foreign to most investors. The airline industry has never been able to consistently produce profits and has spent most of the last decade bleeding red ink.
Reviewing a list of non-dividend paying airlines stocks seems to encapsulate most of the airline industry.
American Airlines (AMR), Delta (NYSE:DAL), United Airlines (UAUA), Continental Airlines (NYSE:CAL), US Airways (LCC), JetBlue (NASDAQ:JBLU), and AirTran (AAI) don’t offer investors any dividend at all.
There are a couple of domestic airline stocks that do pay dividends, but the dividend yields that they offer don’t exactly get investors excited.
Southwest Airlines (NYSE:LUV) – 0.1% dividend yield
SkyWest (NASDAQ:SKYW) – 1.2% dividend yield
Allegiant Travel (NASDAQ:ALGT) – 1.6% dividend yield
On the surface, the dividend options do look better for investors looking at foreign discount airlines.
Gol Linhas Aereas Inteligentes (NYSE:GOL), a large Brazilian discount airline, appears to offer a dividend yield of 12%. However, that is based on a special dividend of $.40 per share paid in March of this year. Since Wall Street only expects GOL to earn $.80 per share in 2010, investors shouldn’t expect to receive $1.60 per share in dividend payments.
Copa Holdings (NYSE:CPA) is another discount airline providing service in Central and South America. The stock currently pays an annual dividend of $1.09 per share, giving the stock a 2.2% dividend yield. However, dividend investors considering COPA just missed the May 31 ex-dividend date. And there is no guarantee what next year’s dividend will hold.
Europe’s largest discount airline, Ryan Air (NASDAQ:RYAAY), announced last month that they would pay a one-time dividend of $.42 per share in 2010. However, they were careful to emphasize that this was a “big one-off” and not the beginning of regular dividend payments.
It seems that dividend investors looking at airline stocks will need to be able to accept one-time dividend payments.
Disclosure: No Positions