Chorus Aviation: Monthly Dividends Are Attractive, But Past Performance Is Worrisome

Chorus Aviation stands out because of its remarkably high dividend yield.

Chorus Aviation was trading yesterday at a yield of 5.5%. This makes the security one of the few publicly-traded issues with a yield above 5%.

You can see a comprehensive list of all high dividend stocks with 5%+ yields here.

Because of its high dividend yield and monthly dividend payments, Chorus Aviation might seem like an attractive investment. Some due diligence reveals that this isn’t necessarily the case.

This article will analyze the investment prospects of Chorus Aviation in detail to determine whether or not the security merits investment for dividend growth investors.

Business Overview

Chorus Aviation is an airline holding company based in Canada whose main asset is the ownership of the Jazz Aviation airline. The company has a market capitalization of $1.1 billion and is headquartered in Halifax, Nova Scotia, Canada. Chorus Aviation completed its initial public offering in 2006.

Even for Canadians, Jazz Aviation is not a well-known name. That’s because Jazz Aviation is primarily a contractor of airline services to other airlines, primarily Air Canada under the brand name Air Canada Express.

CHR.TO Chorus Aviation Chorus At A Glance

Source: Chorus Aviation October 2017 Investor Presentation, slide 3

More specifically, Chorus Aviation has three primarily business lines:

Contracted flying operations: Chorus Aviation leases its fleet to other, more well-known operators such as Air Canada. The customers (i.e. Air Canada) determines the destinations and fleet schedule under these arrangements.

Maintenance, repair, and overhaul: As its name suggests, this segment repairs and maintains the airline fleets of other operators. Chorus Aviation has significant intergovernmental customers in this segment which includes the United Nations and NATO.

Regional aircraft leasing: This segment is the company’s newest, and was established in early 2017 with the goal of expanding the company’s expertise in contracted flying operations to a more global base of customers.