Free cash flow among domestic airlines are also experiencing their greatest increase in years.
Additionally, yield growth among airline companies is on the rise, with the New York Stock Exchange ARCA Airline Index showing a 1-year dividend yield growth of 40.24%, compared to the Dow Jones Transportation Index’s 1-year dividend yield growth of -0.25%.
Value investors may also notice that the New York Stock Exchange ARCA Airline Index is trading at a relatively cheap 13x price-to-earnings, compared to 18x for the Dow Jones Transportation Index and 20x for the S&P 500 as of the end of July 2018.
As a way to gain exposure to the airline industry, investors can look to the U.S. Global Jets ETF (NYSEArca: JETS), the lone ETF dedicated to airline stocks, to access the growth opportunity. JETS follows the U.S. Global Jets Index, which uses fundamental screens to select airline companies, with an emphasis on domestic carriers, along with global aircraft manufacturers and airport companies.
JETS is not a pure play on airlines as it is slightly diversified into aircraft manufacturers and airports & terminal services or infrastructure. The ETF also includes global exposure to North and South Americas, Europe, Asia and Australia.
Financial advisors who are interested in learning more about the airline industry can watch the webcast here on demand.