Investors such as Warren Buffett have made a killing of late in the airlines sector, riding a trend of increasingly positive sentiment toward airlines and broader economic growth/travel trends both domestically and worldwide.
Mr. Buffett and others looking to capitalize on the long-term growth trends and improving economics of air travel have bought into the likes of Delta Air Lines (NYSE:DAL), American Airlines (NYSE:AAL), United Continental Holdings Ltd. (NYSE:UAL), and Southwest Airlines (NYSE:LUV) as a pure-play value/growth long-term play.
In this article, I’m going to share why I believe Boeing Company (NYSE:BA) may be a better way to play the airline sector from both an income and a growth perspective.
Boeing is one of the world’s largest aerospace and defense manufacturers, providing the lion’s share of North American airlines’ capacity requirements via new aircraft manufacturing.
Boeing’s current backlog of nearly half-a-trillion dollars stands out as a huge long-term asset the company has, securing years of work in an industry where guarantees come few and far between.
Boeing’s underlying fundamentals are much stronger on an operational risk-adjusted basis than its airline peers, and as such, Boeing is able to offer investors a relatively juicy dividend yield of 2.3% (its yield was much higher around 18 months ago when I began to follow this stock, due to significant capital appreciation of late).
With a world-class growth profile supporting excellent long-term fundamentals, investors can rest assured Boeing will be a great long-term income play in the years to come.
Invest wisely, my friends.
