Southwest Airlines Co. (LUV), Delta Air Lines, Inc. (DAL): Airlines Are Bidding for Shareholders With Dividends

Of the airlines flying right now, Southwest Airlines Co. (NYSE:LUV), Delta Air Lines, Inc. (NYSE:DAL), and Alaska Air Group, Inc. (NYSE:ALK)should be considered among the most qualified to pay dividends. Southwest has a proven track record of avoiding bankruptcy and showing profits. Delta has greatly reduced its debt load, bought an oil refinery to cut fuel costs, and is finding ways to refurbish older aircraft, thereby avoiding some of the large costs associated with purchasing brand new planes. And Alaska Air has a far more manageable debt load than most other airlines, reducing one of the threats that have meant trouble for many carriers before it.

Going once, going twice

While the airlines listed above are some of the most qualified to pay dividends in the industry, there are many other carriers investors should not expect dividends from any time soon. Airlines posting losses like Gol Linhas Aereas Inteligentes SA (ADR) (NYSE:GOL) are more focused on managing their current situation than paying out precious cash to shareholders. Other airlines like Hawaiian Airlines are expansion-focused right now and will probably use their cash for this purpose. One airline has even been restricted from paying a dividend by its national government: Air Canada as part of a pension relief deal it is also restricted from share buybacks and certain levels of executive compensation. Looking ahead, the dividend paying airlines appear to be among the healthiest airlines in the industry. And if the industry succeeds as a whole, they could provide returns to shareholders both through appreciation and a small amount of income.

Alexander MacLennan owns shares of Air Canada and Delta Air Lines. He also owns the following options: long $22 Jan 2015 Delta calls, long $25 Jan 2015 Delta calls, long $30 Jan 2015 Delta calls, long $17 Jan 2015 US Airways calls. This article is not an endorsement to buy or sell any security and does not constitute professional investment advice. Always do your own due diligence before buying or selling any security. The Motley Fool recommends Southwest Airlines.

The article Airlines Are Bidding for Shareholders With Dividends originally appeared on Fool.com.

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