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TSE:CHR
They're #2 in Canadian regional planes and growing solidly run by a solid team. They also service Air Canada. CHR has a stable cash flow so the near-7% dividend is safe. A good stock.
If there were an economic downturn should they do fine / dividend safe? They recently renegotiated with Air Canada. It is basically a cost-plus contract. They run the flights and get reimbursed for them. The other side of the business is aircraft leasing. It is a newer side but he thinks they can sustain it through any sort of a downturn. He likes the dividend and thinks it is safe.
More money will chase yield stocks like this. This pay 6.9% on a 55% payout ratio. Six months ago, they extended their Air Canada deal to 2035. AC bears the load-factor risk, and Chorus will see very steady results. Chrous's airplane leasing business offers attractive spreads; AC invested $100 million here. (Analysts’ price target is $9.34)
Dividend safe? The payout ratio is in the high 50% level -- it should be safe. They extended their agreement with Air Canada to 2035 and received capital for their leasing business. He likes the stock and thinks it trades undervalued and the dividend could increase. Their earnings are not as correlated to the economy as with Air Canada, so he has made this his largest equity position.
Westjet impacts? He owns this for the yield. It is in the airplane lease business. They are the operator of Air Canada Jazz. The knock was the fear the Jazz deal was going to be renegotiated. That has been resolved and the agreement runs for 17 years. They have a great business model. The Westjet deal will not have any impact on them. Yield 6.5% (Analysts’ price target is $9.00)