Now could be the time to load up on Flight Centre Travel Group Ltd shares

It has not been a pleasant 30 days for shareholders of Flight Centre Travel Group Ltd (ASX: FLT) who have seen its share price drop by over 10%. This means the shares are in negative territory in 2016 even when factoring in the fully franked 4.1% dividend.

The decline appears to stem from the disappointing outlook painted by both Qantas Airways Limited (ASX: QAN) and Virgin Australia Holdings Ltd (ASX: VAH). Both airlines cut capacity in the quarter ahead due to softness in demand. But I wouldn’t let this put you off investing in this great company.

The UN World Tourism Organisation has forecast worldwide tourist arrivals to grow by 4% in 2016 to a record 1.25 billion. Due to the fact the company has extensive operations overseas, I believe this should more than offset a few months of soft demand for domestic travel in Australia.

Additionally, its growing corporate travel segment has been battling it out with Corporate Travel Management Ltd (ASX: CTD) for market share. The company’s corporate segment generated 35% of its global turnover in its most recent half-year results, compared to just 27% five years ago.

It also expanded its corporate presence in Europe with the acquisition of Dutch company Business Travel Development. Although a relatively small outfit, I believe Flight Centre’s management has what it takes to grow it into a meaningful contributor to the overall business.

Whilst I never like to see share prices come down, the drop in Flight Centre’s share price does have a couple of positives. It is trading at 14x earnings, which is lower than the market’s average of 16x earnings and this also means that the shares are paying a fully franked estimated FY 2016 dividend of 4.3%.

The company has grown its dividend at an average of almost 13% per annum over the last 10 years. Although this is expected to slow to around 6% per annum for the next couple of years, I believe it represents a solid dividend with long-term growth prospects.

In my opinion the recent decline in Flight Centre’s share price represents a great opportunity to start a long-term buy and hold investment. In the last 10 years shareholders have been rewarded handsomely for holding its shares and I expect this to prove to be the case over the next 10 years.

Could these just released franked dividend picks turn $15,000 into over $30,000?

When renowned dividend investing pros like Andrew Page issue buy alerts, it pays to listen. Because investors who followed Andrew's recommendation of Australian Pharmaceuticals in early 2015 could've doubled their money in just over a year, turning $15,000 into over $30,000 by the time he recommended they sell and lock in their profits. Chances are you won't want to miss uncovering the names of Andrew's newest share recommendation and short list of 3 dividend Best Buys Now Shares.
So click here to learn more about these potentially life-changing shares.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.