FTAI Aviation Ltd. (NASDAQ:FTAI) has tumbled significantly after an impressive start to the year. The stock is down approximately 27% year to date, despite strong revenue growth in its core aerospace products business. Its decline contrasts sharply with the Insider Monkey Billionaire Index, which has gained 36% over the same period. This divergence raises questions about whether FTAI Aviation is still one of the best aerospace dividend stocks to buy.
Unlike traditional aerospace manufacturers, FTAI Aviation benefits from the recurring demand for engine maintenance, repairs, and replacement modules. Its business is particularly exposed to the CFM56 engine platform, which powers Airbus A320-family and Boeing 737 Next Generation aircraft. This aftermarket focus provides an opportunity to capitalize on the ongoing need to maintain the existing commercial aircraft fleet.
The company’s aerospace business has delivered significant growth in 2026, supported by strong demand for engine modules and components. Revenue in the segment was up 78% year over year in the second quarter to $875 million, as Adjusted EBITDA improved 51% to $249.7 million, affirming strong operating momentum. Management expects $1.05 billion in EBITDA for aerospace products in 2026, increasing to $1.4 billion next year, underscoring continued expansion.
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While revenue growth remains strong, earnings are not keeping pace with expectations. Adjusted earnings per share in the second quarter were $1.13, missing consensus estimates of $1.68. The earnings miss has left the stock trading at a significant premium, with a price-to-earnings multiple of 40x, much higher than the sector P/E average of 20x.
The Stock also trades at a price-to-sales multiple of 4.30x compared to the sector average of 1.77x, also reflecting considerable growth expectations. The premium valuation on earnings and sales multiples can only be justified if FTAI continues to expand its aftermarket engine business while maintaining attractive margins.
At the same time, pressure on airlines to maintain existing fleets could create additional opportunities for engine maintenance and replacement services. Explore this dynamic in How Airline Strain Accelerates FTAI Aviation Ltd.’s (FTAI) Growth.
FTAI reported consolidated adjusted EBITDA of $291.4 million in the second quarter of 2026. Using an illustrative annualized run rate of approximately $1.17 billion and an enterprise value of $19.93 billion implies an EV/EBITDA multiple of roughly 17.1x.
Dividend Performance and Cash Flow
Despite the premium valuation, FTAI Aviation Ltd. generates strong cash flow that allows it to reward investors with dividends. The company raised its quarterly dividend to $0.50 in July, implying an annualized offer of $2 a share. The stock yields 1.13% at the current share price.
The company continues to pay dividends despite a business model that requires substantial investment. While its cash generation fluctuates significantly, it exited the second quarter with about $337 million in cash.
Risks affecting Fair Value
Second-quarter earnings falling short of expectations highlights the risk that revenue growth will not always translate into earnings. Therefore, continued misses could lead to a premium valuation. Additionally, the company has significant debt on its balance sheet ($3.45 billion) as of the second quarter, exposing it to financing costs and refinancing risk.
Operational execution is another important consideration. Scaling engine-module production and fulfilling the $1.465 billion FTAI Power contract will require effective cost management and timely delivery. Delays, production bottlenecks, or cost overruns could weaken profitability and jeopardize the anticipated growth in 2027.
Hedge Fund Positioning
Institutional positioning increased significantly in the first half of the year. The number of hedge funds holding stakes increased to 77 in the second quarter from 56 in the first quarter. Rubric Capital Management increased its stake by 17% to $811.59 million, while Value Aligned Research Advisors increased by 31% to $376.92 million.
As of September 30, the number of FTAI shares sold short dropped to 5.73 million from 6.71 million as of August 31. Short interest around the stock stands at about 5.58%, implying minimal bearish positioning.
The Verdict
FTAI Aviation Ltd. has a compelling growth story, supported by strong demand for aerospace products and expanding engine-module production. Its asset-light strategy could improve capital efficiency over time.
The second-quarter earnings miss, debt burden, and capital requirements mean investors need evidence that projected growth will translate into sustainable earnings and free cash flow.
However, the stock’s approximately 27% year-to-date decline does not automatically make it undervalued. Its elevated earnings and sales multiples, second-quarter earnings shortfall, substantial debt burden, and ongoing capital requirements all warrant caution. The dividend provides an additional shareholder return, but its relatively modest yield is unlikely to be the primary attraction for income-focused investors.
While we acknowledge the risk and potential of FTAI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FTAI and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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