Why Air Lease (AL) is a Great Dividend Stock Right Now
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Air Lease in Focus
Air Lease (AL) is headquartered in Los Angeles, and is in the Transportation sector. The stock has seen a price change of -12.1% since the start of the year. The company that leases planes to airlines is paying out a dividend of $0.2 per share at the moment, with a dividend yield of 2.37% compared to the Transportation - Equipment and Leasing industry's yield of 2.07% and the S&P 500's yield of 1.78%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.80 is up 6% from last year. In the past five-year period, Air Lease has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.86%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Air Lease's current payout ratio is 19%. This means it paid out 19% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, AL expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $4.41 per share, with earnings expected to increase 455.65% from the year ago period.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, AL is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Air Lease Corporation (AL) : Free Stock Analysis Report
