Quite a few of you have asked me for my views on Singapore Airlines stock.
Since COVID lows, the stock is up almost 90%.
Even at current prices however – Singapore Airlines pays an astounding 7.1% dividend yield.
That’s a higher dividend yield than most bank stocks like DBS or OCBC bank (about 5 – 6% dividend yield).
And because of the strong demand for air-travel post COVID, Singapore Airlines continues to report record profits.
So… will I buy Singapore airline stock?
Let’s dive in.
Singapore Airlines pays a 7.1% dividend yield
In FY24, Singapore airlines declared a total dividend of 48 cents.
Using the latest share price of $6.74 – that works out to a 7.1% dividend yield.
Given that DBS and OCBC bank pay about 6% dividend yield, Singapore airlines actually has a higher dividend yield than the Singapore banks.
And this 7.1% dividend yield is only at a conservative 52% payout ratio (similar payout ratio to the banks).
So as long as Singapore airlines can keep up the current level of profits, the dividend may be pretty sustainable.
Operational Performance of Singapore Airlines – almost at pre-COVID levels, but profits are way up
According to SIA – they expect to reach pre-pandemic passenger capacity levels within this FY.
It is interesting to note that even though capacity levels have not recovered to pre-pandemic levels.
Profits are way, way, way higher than pre-pandemic levels.
Some quick numbers:
FY2023/24 net profit: S$2.675 billion FY2018/19 (pre-COVID) net profit: S$682.7 million
In plain English – Singapore Airlines FY24 profit is $2.0 billion higher (or 295% higher) than pre-COVID levels, despite the fact that their passenger capacity has not even recovered to pre-COVID levels.
That’s crazy stuff.
Why are Singapore
