The lessor highlighted that it sells planes when it makes business sense from multiple viewpoints besides the obvious gain on sale and bought back stock at a 15% discount. It's not something I am unhappy with but also not something that I believe is so strong it warrants not detailing the airplane shortages and travel recovery.ĪerCap clearly wanted to have the focus on its way of recycling capital to the benefit of shareholders and perhaps its stock prices tanking in March was a reason for that. AerCap did highlight value creation for investors. I would rather have seen the actual graphs with recovery numbers. Instead, AerCap decided to put in a slide with news headlines on how travel is rebounding. Take those two slides and there isn't much of a pitch you have to do to show your business is positioned rather well and attractive to investors. That wasn't the case this time and that is unfortunate, because those two slides say enough on why airplane lessors are positioned so well in the current market. AerCap usually follows its business activity slide with a slide on recovery of the air travel market and the airplane production shortfalls. The Q1 2023 earnings call was unfortunately less informative than I would have liked. The AerCap presentation is generally one that I am looking forward to as it tends to be one packed with information. That unwinding process does put some pressure on the stock as more shares come in circulation unless met with a repurchase for AerCap, but the underlying business keeps improving. In March, stock prices started weakening somewhat as General Electric ( GE) started capitalizing on its stake in the lessor. The stock is up nearly 100% more than easily outperforming the 35% return for the broader markets, supported by strong long-term demand for air travel and a recovery towards that trendline. Since I wrote about AerCap in 2020, share prices have surged. I don't regret buying shares of the Ireland-based lessor, and if I had any regret, it is that I did not buy more. AerCap Stock: A Strong OutperformerĪerCap stock has not disappointed me one day. In this report, I look at the stock price performance as well as the company's most recent results, and I will provide an update to my price target for AerCap. The stock hasn't let me or my portfolio down a single time since I added shares. Since I marked shares a buy during the pandemic, AerCap stock has showed outsized returns for shareholders, validating my buy thesis for the stock. The company is free of some of the pains that airlines face and has streamlined rental collection from long-life assets that are now more in demand than ever. ( NYSE: AER) is my favourite investment opportunity to capitalize on the recovery in air travel demand. VYM has lost 5.67% year to date, while an equally weighted portfolio of the stocks above would have lost 11.34%.AerCap Holdings N.V. Through May 2023, an equally weighted portfolio of these 20 stocks mentioned above would have underperformed VYM by about 6%, largely due to the market volatility in the Banking sector. The goal of my high yield watchlist is to discover companies to add to my dividend growth portfolio in an attempt to consistently exceed the market return of the Vanguard High Dividend Yield ETF ( VYM). CompanyĪmerican Electric Power Company Inc ( AEP) The difference is 72 basis points or approximately 22%, suggesting the stock could be undervalued. An example below is American Electric Power Company, Inc.: the current yield is 3.99% while its five-year average is 3.27%. This simple idea suggests a company's yield should revert to the mean over time. I use dividend yield theory to determine if a stock is potentially undervalued or overvalued and consequently worthy of further research. Lastly, a company must be able to maintain a growing dividend for me to consider investing in it, so a trailing twelve-month payout ratio of less than 100% is used as the final filter. In addition to the 3% yield, a 10-year dividend growth rate of at least 5% is the next filter used in hopes to at least keep up with, if not outpace, inflation. While there could be some debate as to what qualifies a company as "high yield," 3% is sufficient for me. Next, the current annual dividend yield of the companies on this watchlist is at least 3%. Each of the companies on my watchlist is a large-cap stock, which equates to a market cap of at least $10 billion. The companies listed on this watchlist are stable, with a track record of paying and raising their dividends consistently. MicroStockHub High Yield Watchlist Criteria
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