Is the Flight Centre share price a buy for income?

The Flight Centre Travel Group (ASX: FLT) share price is a potential buy for income.

| More on:
a woman

Following a volatile 2018 and concerns over global growth, the Flight Centre Travel Group Ltd (ASX: FLT) 聽share price has had a flat start to 2019.

A meagre half-year earnings report was given a silver lining with the company announcing a special dividend of $1.49 per share. With the Flight Centre share price聽near its 52-week low, the special dividend gives investors an opportunity to buy Flight Centre shares for income.

Rough half-year report

Earlier this year Flight Centre reported lacklustre half-year earnings. Revenue increased by 7.4% to 1.46 billion, however, net profit dropped 16.9% to $85 million and EBITDA for the half-year fell 5.6% to $167.3 million. As a result, Flight Centre announced that underlying profit for the full year would be at the bottom of its previous guidance range of $380 million to $420 million.

According to Flight Centre higher staff wages, lower margins and a downturn in consumer spending were to blame for a slowdown in the Australian leisure segment. However, a strong performance from the company鈥檚 corporate travel section was a positive and restored some respectability to half-year earnings.

Special dividend

The franking credit abolition policy announced by Labor last year aims to stop investors (except pensioners) who do not pay income tax, from receiving franking credits. The policy, which would come into effect on July 1 of 2019 if Labour wins the Federal election, provided a window of opportunity for companies with extra cash on their balance sheets.

In what can be interpreted as a silver lining to a disappointing half-year report, Flight Centre declared a 60-cent interim dividend and a $1.49 per share special dividend. The special dividend is 250% more than what was returned to shareholders at the same time last year.

Broker note

Recently broker Morgan Stanley issued a retained overweight rating on Flight Centre with a $51.00 price target. Morgan鈥檚 cited the strong performance and potential for growth in Flight Centre鈥檚 corporate travel segment, which would compensate concerns over a slow leisure market.

Foolish takeaway

Flight Centre is a quality business with solid financials, a strong board and a tremendous history of growth. In my opinion, even though there are soft trends in the sector and concerns over global growth, the special dividend at the current share price is a great buy for income.

If the Flight Centre special dividend has you interested, here are our 3 Top Dividend shares for 2019.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Flight Centre Travel Group Limited. 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 Scott Phillips.

More on 鈴革笍 Dividend Shares

falling healthcare asx share price Mesoblast capital raising
鈴革笍 Dividend Shares

Sonic Healthcare (ASX:SHL) dividend rises 7%, share price falls after FY21 results

The Sonic Healthcare Limited (ASX: SHL) dividend is on the rise following a bumper full year FY21 result announced on Monday. However, the …

Read more

A smiling woman with a handful of $100 notes, indicating strong dividend payment by Thorn Group
鈴革笍 Dividend Shares

The Adairs (ASX:ADH) dividend more than doubled in FY21

A record FY21 result has helped double the Adairs Ltd (ASX: ADH) dividend for FY21. The company’s strong financial and …

Read more

A business man on a road raises his arms as dollar notes rain down on him, indicating a dividends windfall
鈴革笍 Dividend Shares

The Newcrest (ASX:NCM) dividend boosted 129%

The Newcrest Mining Ltd (ASX: NCM) dividend just increased for a sixth consecutive year thanks to higher copper and gold …

Read more

Happy couple laughing while shopping in supermarket
52-Week Highs

August has been a great month so far for the Woolworths (ASX:WOW) share price

The Woolworths Group Ltd (ASX: WOW) share price has had a stellar month thus far. Since the start of the …

Read more

wine glass full of coins
鈴革笍 Dividend Shares

The Treasury Wines (ASX:TWE) dividend bumped up by 60%

The Treasury Wine Estates Ltd (ASX: TWE) share price struggled on the ASX yesterday, despite the winemaker and distributor boosting …

Read more

Young boy cries and covers eyes with torn money on table
鈴革笍 Dividend Shares

The Origin (ASX:ORG) dividend has dropped 20%

The Origin Energy Ltd (ASX: ORG) share price spent yesterday in the red after the company posted a $2.2 billion …

Read more

two people hold a sheet above their head while making a bed in a room featuring homewares.
Retail Shares

How did the Adairs (ASX:ADH) share price respond last earnings season?

Investors will be hoping the Adairs Ltd (ASX: ADH)聽share price will react the same as it did last reporting season. …

Read more

Two men excited to win online bet
Share Market News

Why the Tabcorp (ASX:TAH) dividend was boosted by 32%

Income investors can look forward to a solid Tabcorp Holdings Ltd (ASX: TAH) dividend after the company released its FY21 …

Read more