IB Net Payout Yields Model

Southwest Airlines: Ignored Dividend

Update - Dec. 28

Southwest has faced a brutal week over the Christmas holiday. The airline had a promising dividend return and a cheap stock heading into this disaster. 

-According to FlightAware, Southwest has canceled over 2500 flights on Wednesday, adding to nearly 2700 cancellations on Tuesday and thousands more on Monday. The data provider has accounted for over 2300 cancellations planned for Thursday as well. The levels of cancellations represent between 58% and 64% of scheduled flights per day in the three day span.

Original article posted on Dec. 9

  • Southwest Airlines reinstated the dividend and the stock actually fell $2.
  • The airline now offers a 2% dividend yield, far in excess of yields prior to COVID, despite paying the same dividend.
  • The stock remains too cheap at 11x '23 EPS estimates that appear very conservative.
The stock market is so negative on the airline sector that Southwest Airlines (NYSE:LUV) reinstating the dividend has provided no help to sector stocks. The airline stock regularly traded around $60 pre-COVID and even during a rally in early...

Read the full article on Seeking Alpha. 

Disclosure: No position mentioned. Please review the disclaimer page for more details. 


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