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SkyWest Rewards Investors With Dividend Hike & New Buyback

Zacks Equity Research

In a regulatory filing, SkyWest SKYW announced that its board of directors has approved a new share repurchase program worth $250 million. Also, the regional carrier raised its quarterly dividend by 20%. Notably, this St. George, UT-based carrier has been consistently rewarding its shareholders for quite some time.

Twin Shareholder-Friendly Moves

This Zacks Rank #1 (Strong Buy) company hiked its quarterly dividend to 12 cents per share (annualized 48 per share), representing a 20% improvement from the previous payout of 10 cents per share (annualized 40 cents per share). The new dividend, which has been approved by the company’s board of directors, will be paid on Apr 4, 2019 to its stockholders of record as of Mar 29. The dividend yield based on the new payout and the Feb 6 closing market price is approximately 0.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.

We believe that this dividend hike not only highlights SkyWest’s commitment to create value for shareholders but also underlines the carrier’s healthy financial condition and confidence in its business, going forward. Additionally, it is confident about generating solid free cash flow over the next few years.

SkyWest, Inc. Price


SkyWest, Inc. Price | SkyWest, Inc. Quote

The $250 million share buyback program marks another move by SkyWest to add value to its stockholders. It replaces the $100 million buyback program, of which $21 million remained. That program was cleared in February 2017.

Dividend Hikes: Not Uncommon for Transports

The current tax law, which came into force in December 2017, is a boon to transports as far as investor-oriented activities like dividend payments are concerned. The significant reduction in corporate tax rate under the current law has boosted cash flow as well as earnings of transportation stocks. Owing to the significant cuts in tax bills, more cash remains in the hands of these companies to fund capital expenditures, buybacks and dividends among others.

Apart from SkyWest, CSX Corporation CSX — another key member of the Zacks Transportation sector — announced a hike in its quarterly dividend on Feb 6. The railroad operator upped its quarterly dividend by 9.1% to 24 cents per share (96 cents annually) from 22 cents (88 cents annually). The new dividend, sanctioned by the company’s board of directors, will be paid on Mar 15, 2019 to its stockholders of record as of Feb 28. We remind investors that other transportation players like Alaska Air Group ALK and J.B. Hunt Transport Services JBHT also announced dividend hikes over the past few days.

As investors prefer an income generating stock, a high dividend yielding one is much coveted. Needless to say that investors are always on the lookout for companies with a track record of consistent and incremental dividend payments.

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