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This Dividend Stock Just Raised Its Payout by 50%

An increase to a dividend can demonstrate significant confidence to investors, especially when it’s a large rate hike. For a company to make a substantial increase, it will need to be confident in being able to generate strong enough results to sustain the payout for the foreseeable future.

On Thursday, Delta Air Lines (NYSE:DAL) declared its latest quarterly dividend. At $0.15, the dividend, which is to be paid in August, will be 50% higher than what Delta was previously paying -- $0.10. With the increase, Delta’s dividend now yields 1.2%, which is close to the S&P 500 average of 1.3%.

In 2020, the company suspended its dividend due to the pandemic and when it restarted it in 2023, it was at a much lower rate ($0.10 versus $0.4025). Delta’s increase signifies that the travel industry is in stronger shape and that its business is on better footing as well.

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In the first quarter of 2024, the company reported an operating profit of $614 million, which was a big improvement from the prior-year period where Delta incurred a loss of $277 million. And for the full year, it projects that its operating margin will be between a positive 14% and 15% of revenue.

Year to date, shares of Delta are up 23%. But the stock remains below its pre-pandemic levels when it reached highs of more than $60 – currently it’s at around $50. Trading at a price-to-earnings multiple of just six, it’s a fairly cheap stock for investors right now. And if its performance continues to be strong, the dividend could continue to go higher in future.