Southwest Airlines Co's Dividend Analysis
Assessing the Dividend Profile of Southwest Airlines Co
Southwest Airlines Co (NYSE:LUV) recently announced a dividend of $0.18 per share, payable on 2024-03-27, with the ex-dividend date set for 2024-03-05. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Southwest Airlines Co's dividend performance and assess its sustainability.
What Does Southwest Airlines Co Do?
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Southwest Airlines is the largest domestic air carrier in the United States by passengers boarded. Southwest operates over 700 aircraft in an all-Boeing 737 fleet. Despite offering some longer routes and a few perks for business travelers, the airline predominantly specializes in short-haul, leisure flights, using a point-to-point network. Southwest operates a low-cost carrier business model.
A Glimpse at Southwest Airlines Co's Dividend History
Southwest Airlines Co has maintained a consistent dividend payment record since 2023. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Southwest Airlines Co's Dividend Yield and Growth
As of today, Southwest Airlines Co currently has a 12-month trailing dividend yield of 2.12% and a 12-month forward dividend yield of 2.12%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Southwest Airlines Co's annual dividend growth rate was 58.70%. Based on Southwest Airlines Co's dividend yield and five-year growth rate, the 5-year yield on cost of Southwest Airlines Co stock as of today is approximately 2.12%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Southwest Airlines Co's dividend payout ratio is 0.46.
Southwest Airlines Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Southwest Airlines Co's profitability 7 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported net profit in 9 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Southwest Airlines Co's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Southwest Airlines Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Southwest Airlines Co's revenue has increased by approximately 34.40% per year on average, a rate that outperforms approximately 88.95% of global competitors.
Next Steps in Dividend Investing
When considering the future prospects of Southwest Airlines Co, investors should weigh the company's consistent dividend payments, robust dividend growth rate, manageable payout ratio, solid profitability, and strong growth metrics. These factors collectively suggest that Southwest Airlines Co may continue to be a compelling choice for investors seeking dividend income combined with potential for capital appreciation. As the airline industry evolves with economic cycles and consumer trends, Southwest Airlines Co appears poised to maintain its commitment to rewarding shareholders through dividends. For investors focused on income generation, could Southwest Airlines Co be the next addition to your portfolio?
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
