Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see Delta Air Lines, Inc. (NYSE:DAL) is about to trade ex-dividend in the next 4 days. You will need to purchase shares before the 19th of February to receive the dividend, which will be paid on the 12th of March.
Delta Air Lines’s upcoming dividend is US$0.40 a share, following on from the last 12 months, when the company distributed a total of US$1.61 per share to shareholders. Last year’s total dividend payments show that Delta Air Lines has a trailing yield of 2.7% on the current share price of $59.13. We love seeing companies pay a dividend, but it’s also important to be sure that laying the golden eggs isn’t going to kill our golden goose! As a result, readers should always check whether Delta Air Lines has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Delta Air Lines
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Delta Air Lines is paying out just 21% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It’s encouraging to see Delta Air Lines has grown its earnings rapidly, up 56% a year for the past five years. Delta Air Lines earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky “beep-beep”. We also like that it is reinvesting most of its profits in its business.’
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Delta Air Lines has delivered 31% dividend growth per year on average over the past seven years. It’s exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
Final Takeaway
From a dividend perspective, should investors buy or avoid Delta Air Lines? When companies are growing rapidly and retaining a majority of the profits within the business, it’s usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly – this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating Delta Air Lines more closely.
Ever wonder what the future holds for Delta Air Lines? See what the 18 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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