Why Airline Stocks Should Be on Your Income Radar

I’ll be the first to admit that investing in airline stocks is tricky at the moment. If nothing else, the selloff that airline stocks faced in late May due to pricing concerns is a pointer. But I want to make a bold call here: It’s time for investors to not just consider airline stocks — but to consider them as income plays. Yes, Southwest Airlines (LUV) and Delta Air Lines (DAL) both yield south of 1% right now. But I think we’re starting to see a trend that should soon change that.

In fact, just recently, both companies put a significant jolt into their quarterly payouts — something that should become a more common occurrence. The airline industry traditionally hasn’t been too generous about returning value to shareholders in form of a dividend. In fact, as of the beginning of 2013, LUV was the only major U.S. airline paying dividend; DAL and Alaska Air Group (ALK) only joined later that year. As you might have guessed, a large part of why airlines have been so skimpy on the dividend front has been past profitability struggles. But we might be in the midst of a new dawn for airline stocks.

Source: InvestorPlace

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