Alaska Air Group, Inc. (ALK) Hops on Board the Dividend Train

Page 1 of 2

Airline investors have been well rewarded in 2013 by the hard work undertaken by airline management teams over the last three years to position the industry for long-term profitability. Airline executives have by and large done a good job containing unit cost growth and growing unit revenues in the face of skyrocketing fuel prices, boosting financial returns.

With a more stable financial outlook, many airlines have started to think about returning some cash to their long-suffering shareholders. On Thursday, Alaska Air Group, Inc. (NYSE:ALK) became the latest airline to initiate a regular dividend. It will make its first dividend payment of $0.20 per share on August 22.

Alaska Air Group, Inc. (NYSE:ALK)

This decision provides further evidence that the company’s management team is committed to returning excess cash to shareholders and keeping capex disciplined. It also demonstrates their confidence that Alaska Air Group, Inc. (NYSE:ALK) will remain consistently profitable, as it has been since 2010.

ALK Net Income TTM Chart

Alaska Air TTM Net Income, data by YCharts

Three airline dividend leaders
The only airline to maintain a dividend throughout the Great Recession was Southwest Airlines Co. (NYSE:LUV), which has consistently had one of the best balance sheets in the industry. But, for many years, Southwest Airlines Co. (NYSE:LUV)‘s quarterly dividend was a paltry $0.01 per share, which left the company’s yield below 0.5%.

In the past year, Delta Air Lines, Inc. (NYSE:DAL) has really led the charge in terms of returning cash to shareholders more aggressively. The company told investors late last year that its board of directors was evaluating ways to return cash to shareholders and expected to have a decision by mid-2013. In May, Delta Air Lines, Inc. (NYSE:DAL) announced that it was beginning a $0.06 per share quarterly dividend and a $500 million share repurchase program.

Based on Delta Air Lines, Inc. (NYSE:DAL)’s share price before the announcement, the dividend yield would have been approximately 1.4%, far outstripping Southwest Airlines Co. (NYSE:LUV)’s dividend. However, Southwest quickly shot back by quadrupling its dividend, giving its investors a comparable yield. After Southwest’s announcement, many investors began to speculate about which airline would be next to initiate a dividend.

In some ways, it’s not very surprising that Alaska Air Group, Inc. (NYSE:ALK) was the third major airline to begin a dividend. The company already had a robust share repurchase program, and has spent more than $370 million to buy back shares since 2006, creating substantial value in the process. Alaska Air Group, Inc. (NYSE:ALK) is also in the middle of a $250 million share repurchase program that it plans to complete by the end of 2014.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!