Share of the U.S. Global Jets ETF (NYSEArca: JETS) are up nearly 2% Thursday, making the lone dedicated airline exchange traded fund one of the day’s best performers on a percentage basis and positioning the fund for one of its best intraday performances since coming to market in late April, after United Airlines said it will repurchase $3 billion worth of its own shares.
That announcement comes after Chicago-based United bought back $250 million of its own stock during the second quarter as part of a $1 billion buyback plan. Shares of United, the second-largest holding in JETS at a weight of 12.1%, are up 2.6% at this writing.
United’s massive buyback expansion continues a trend of increasing shareholder rewards from the airline industry and some big-name JETS constituents. In May Delta Airlines (NYSE: DAL), JETS’ largest holding, said “that it plans $6 billion in new stock buybacks and added dividends through 2017, the biggest single cash return to shareholders by an airline,” reports Jack Nicas for the Wall Street Journal.
Delta, 12.6% of JETS’ weight, boosted its quarterly dividend 50% to 13.5 cents per share. Southwest (NYSE: LUV), the longest-tenured dividend payer among airlines, also said in May it is boosting its quarterly dividend 25% to 7.5 cents per share each quarter. Texas-based Southwest also unveiled a $1.5 billion share buyback plan. Southwest is the second-largest holding in JETS at a weight of 11.4%. [New Airline ETF Could be a Success]
American Airlines (NasdaqGS: AAL), which yields 1%, introduced a dividend last year. “Over the past five years, dividends for the industry as a whole have increased 143%, according to Thomson Reuters data,” reports Michael Vallo for Barron’s.
United is the only member of JETS’ four largest holdings that currently does not pay a dividend, but as Barron’s notes, the company has left the door open to being a dividend payer. Alaska Air (NYSE: ALK) has doubled its dividend in two years, but half of JETS’ top 10 holdings currently do not pay dividends.