After a great first quarter, stocks have hit some turbulence over the last two weeks. The economy looks like it will continue to move slowly ahead, but earnings growth is slowing down substantially from the pace of the last two years. Companies that can still show some growth and provide a great dividend yield should outperform the market. One stock that I have not written about before fits this outlook.
Aircastle, through its subsidiaries, engages in the acquisition, lease, and sale of high-utility commercial jet aircraft to passenger and cargo airlines worldwide. The company also makes investments in various aviation assets, including debt investments secured by commercial jet aircraft.
Here are seven reasons Aircastle is a solid dividend play at under $12 a share:
- It yields a generous 5.1%. It also has raised its dividend 50% in two increments over the last 18 months as it recovers from the "great recession."
- Its fleet is well diversified both by type of plane and geography. It also has no debt that needs to roll over until 2015.
- Aircastle is under analysts' price targets. The median price target on the company from the nine analysts that cover the stock is $15 a share.
- It has crushed earnings estimates each of the last five quarters. In addition, consensus estimates for FY2012 and FY2013 have moved up slightly over the past two months.
- The stock is cheap at under 3 times operating cash flow and just 62% of book value.
- The stock has a low five-year projected PEG (.78) for a high yielder with low valuations. Revenues are projected to grow around 5% annually over the next two years as well.
- Aircastle sells for just over 7 times earnings, which is an over 30% discount to its historical average.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AYR over the next 72 hours.