Will Webjet pay a dividend in 2022?

When will Webjet pay a dividend again?

| More on:
A woman sits crossed leg on seats at an airport holding her ticket and smiling.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Webjet has historically been very generous with dividends
  • Prior to COVID-19, it regularly shared 50% to 60% of its profits with shareholders
  • Goldman Sachs believes dividend payments aren't too far away from returning

For much of the last decade, Webjet Ltd (ASX: WEB) shares were a decent option for income investors.

The online travel agent regularly shared in the region of 50% to 60% of its profits with shareholders.

That was of course until COVID-19 reared its ugly head. Since then, Webjet has been bleeding cash and unsurprisingly suspended its dividend payments.

But with trading conditions in the travel sector improving greatly in 2022, investors may now be wondering when dividends will return.

When will Webjet start paying a dividend?

According to a recent note out of Goldman Sachs, its analysts believe that Webjet could soon be in a position to start paying dividends again.

However, don’t get your hopes up for a dividend from Webjet in FY 2022. Goldman expects the company to report another sizeable loss this year before returning to profit in FY 2023.

At which point the broker expects Webjet to pay shareholders a 9 cents per share fully franked dividend. Based on the current Webjet share price of $5.59, this will mean a modest yield of 1.6%.

But it gets better. With the broker forecasting another jump in profits in FY 2024, it expects the company’s dividend to increase to a fully franked 14 cents per share. This equates to a more attractive 2.5% yield.

What is driving its return to profit growth?

Webjet’s return to growth is expected to be underpinned by the travel market recovery, a stronger and more profitable business model, and its growth engine – the WebBeds (bedbanks) business.

Goldman commented: “We expect WEB to benefit from the tailwind of travel recovery, offering structurally improved profitability and a strong outlook on the Bedbanks business, which we expect to resume the strong growth journey that it embarked on prior to COVID.”

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Travel Shares

A traveller sits slumped on the floor of an airport with ehr suitcase looking fed-up as other travellers walk past.
Travel Shares

How did ASX travel shares perform in June?

It hasn't been smooth sailing for ASX travel shares in the last month.

Read more »

Two adults and a child look happy as they walk through airport with child sitting on suitcase.
Travel Shares

ASX 200 travel shares leap as Australia scraps COVID-19 vaccine mandates for international arrivals

What positive news could be boosting ASX200 travel shares today?

Read more »

A mum lifts her daughter high into the air so she can fly.
Travel Shares

Here’s why I think the Webjet share price could fly higher in 2022

There are plenty of reasons why I think this ASX travel share is a good opportunity.

Read more »

a small boy sits alone with his brightly coloured suitcase next to him in a deserted airport while he rests a hand against his head and looks down into his lap as though he is weary.
Travel Shares

Why did the Flight Centre share price tumble 15% in June?

The ASX 200 travel giant struggled last month. We take a closer look.

Read more »

Woman sitting looking miserable at airport
Travel Shares

Why did the Qantas share price plunge 19% in June?

With July upon us, we look at the headwinds that battered the flying kangaroo in June and a few offsetting…

Read more »

Paper aeroplane going down on a chart, symbolising a falling share price.
Travel Shares

What is holding back the Flight Centre share price today?

Flight Centre shares are slumping today...

Read more »

a young girl wearing a set of airplane wings stands on a tarmac with hands in the air and an excited look on her face as though she is about to take off.
Travel Shares

Why this smaller ASX travel share is locking horns with Qantas over regulation

Here's the latest on Regional Express' battle with Qantas over regional flight routes.

Read more »

An airport ground staff worker holds two red beacons in either hand crossed above his head on a vast airport tarmac.
Travel Shares

Own Qantas shares? Here’s why the $5K staff bonus could be up in the air

Qantas sounds alarm bell on $5K bonus to employees

Read more »