Taking Off or Turbulence Ahead?
Singapore Airlines (SIA) is one of the world’s most prestigious airlines, renowned for its exceptional service and luxurious travel experience. As a publicly-traded company, SIA’s stock is an attractive investment option for those interested in the aviation industry.
With the pandemic out of the way and tourism resuming, stocks of SIA have rebounded and recently gave out dividends after 3 years. But after understanding the danger of what airline stock may have in the future, some readers might want to find out more information on whether is SIA’s stock something worth investing in now and in the future.
Therefore, we will examine the factors affecting SIA’s stock, analyze its financial and market performance, evaluate expert opinions on investing in SIA’s stock, assess its future prospects, and provide tips for investing in SIA’s stock.
Singapore Airlines
Singapore Airlines is the flag carrier of Singapore and one of the most respected airlines in the world. Founded in 1947, the airline has a fleet of over 100 aircraft and operates flights to more than 60 destinations worldwide. SIA is known for its high-quality service, comfortable cabins, and innovative in-flight entertainment. The airline has won numerous awards for its exceptional customer service, including the “World’s Best Airline” award from Skytrax four times.
Overview of Singapore Airlines’ stock
SIA is listed on the Singapore Exchange (SGX) and its stock is available for purchase by any investor. The company’s stock is traded under the ticker symbol C6L. Here’s a brief summary of what happened to the stock in the past 3 years.
In 2020, the SIA stock crashed as airline businesses had to close down one after another. During such long-term economic uncertainty, SIA had to lay off more than 50% of its workforce and reduce employees’ salaries by 10% in order to stay afloat. In order to stay afloat, the company also had to cut off dividends. By the end of 2020, SIA reported a full-year loss of $212 million.
But investors are staying optimistic about the stock.
SIA shares are one of Singapore’s most well-known well paying dividend stocks out there. It is considered a blue chip stock to many Singaporeans and investors who know the company. Many countries all around the world require transit from Singapore Airlines. With Jewel fully up and running, tourism is now back up and the SIA is able to make a record quarter amid the resurgence of global travel.
Its net profit of $557 million for its second quarter ended Sept 30 was a whopping 51 percent higher than the first quarter’s $370 million. Revenue during the July-September quarter grew 14.3 percent quarter on quarter to $4.49 billion. For just $5.74 per share(18th April), the company gives a payout of $0.01 per share or 1.76% in annual dividend yield. So needless to say, it seems that SIA is coming back up to its previous all-time high.
Factors affecting Singapore Airlines’ stock
Several factors can affect the price of SIA’s stock. These include:
Fuel prices
Fuel prices play a significant role in the aviation industry and can have an impact on SIA’s profitability. Higher fuel prices can increase the airline’s operating costs. Which can lead to lower profits and a decline in its stock price. With the current de-dollarization of oil from Saudi Arabia to push for RMB. Fuel prices are expected to be volatile over the next few years.
Competition
The aviation industry is highly competitive, and SIA faces competition from other airlines, both domestically and internationally. Any significant changes in the competitive landscape can affect SIA’s market share and profitability. This can subsequently impact its stock price greatly.
While competition may be high, the Singapore government pays extremely close attention to our airline industry since SIA provides one of the highest earnings to Singapore’s GDP. According to estimates, Singapore’s GDP, including the airline sector and its supply chain, is supported by US $22.1 billion. The country’s GDP is supported by foreign visitor spending to the tune of US $14.5 billion more, for a total of US $36.6 billion.
Macroeconomic factors
Macroeconomic factors such as changes in interest rates, inflation, and economic growth can affect SIA’s stock price. For example, if the economy is experiencing a slowdown, people may be less likely to travel. This fast-paced level of volatility in a dividend stock can lead to a decline in SIA’s revenue and stock price.
Most commercial airline industries, typically require government intervention in order to grow and stay afloat. And not many countries are willing to invest in their airline. The only few countries that are actually putting up against a fight as top airports in the world are Japan, Seoul, and Qatar. These countries have constantly been putting up a great fight but Singapore Airlines have historically been ranked at the top.
Expert opinions on investing in Sia stock
Opinions on investing in SIA’s stock are mixed.
Some experts believe that the airline industry will recover as the world emerges from the COVID-19 pandemic and that SIA is well-positioned to benefit from this recovery.
Others, however, are more cautious. Citing the ongoing uncertainty in the industry, the risk of recession slowly down trade, and the risk of increased competition.
Singapore Airlines’ future prospects
SIA’s future prospects depend on several factors, including the trajectory of the COVID-19 pandemic, the pace of the global economic recovery, and the level of competition in the aviation industry. The airline has taken steps to position itself for the future, including expanding its network and investing in new aircraft. SIA has also launched a new low-cost carrier, Scoot, to cater to budget-conscious travelers.
Comfort now plays a big factor in choosing which airline to travel. Singapore Airlines ranks among the top best airline to travel for comfort. Here’s a video of what it is like taking the longest flight in the world on Singapore Airlines.
For a slight increase in pricing, you are able to get comfort, a high level of service, great tasty food, and awesome entertainment for you to enjoy the ride. It’s no wonder many avid travelers love to take Singapore Airlines!
Risks of investing in Singapore Airlines’ stock
Before you plan on buying SIA stocks, here are the outstanding risk you need to consider before investing in SIA’s stock.
Industry-specific risks
The aviation industry is highly cyclical, and SIA’s financial performance can be impacted by factors outside of its control, such as fuel prices, geopolitical events, and pandemics.
Competitive risks
SIA faces intense competition from other airlines, and any significant changes in the competitive landscape can impact its market share and profitability.
Currency risks
SIA operates in multiple countries and is exposed to currency risk. Fluctuations in exchange rates can impact the company’s revenue and profitability.
Tips for investing in Singapore Airlines’ stock
Investing in SIA’s stock can be a good option for those interested in the aviation industry. Here are some tips to consider before investing:
Do your research
Before investing in SIA’s stock, it’s essential to research the company’s financial performance, competitive landscape, and future prospects. You can learn more about SIA stocks from Yahoo Finance or Yahoo Business.
Diversify your portfolio
Investing in SIA’s stock should be part of a diversified portfolio. This can help reduce the risk of loss if the aviation industry experiences a downturn.
Consider the long-term
Investing in SIA’s stock should be viewed as a long-term investment. The aviation industry can be volatile, and it may take time for the industry and SIA’s stock price to recover fully.
How to Invest in Stocks
If you are looking to invest in SIA stocks or just want to learn to invest your money. You can sign up right now for an online brokerage. If you are a Singaporean, chances are your CPF(Central Provident Fund Board) account has already invested a portion in these stocks. With a dividend yield of about 3.5% to 4.5%, these stocks make the most ideal investment to financially retire without worrying too much.
You can invest in these stocks using your CPF OA once you have met the requirement. But if you would still like to invest in these companies, be sure to sign up through an online brokerage or open up an investment bank account. Here are my affiliate links to different online brokerages that I use. P.S. If you sign up using my referral link, you may get a chance to earn a free stock, cash coupon, or discount on your next investment purchase!
If you want to find out more about online brokerage, here is in-depth information on how to invest in stocks as a beginner.
WHAT YOU NEED TO CONSIDER
SIA is a well-established airline with a strong reputation for quality and service. However, the COVID-19 pandemic has had a significant impact on the aviation industry, and SIA’s financial performance has been affected. And if you plan on investing in a dividend stock, your expectation of it should be stable. However, as medical professionals state the chances of another high-risk pandemic are likely to increase as climate change affects us. SIA stock may not be as stable in a fast-paced environment.
While the future prospects for the company are uncertain, investing in SIA’s stock can be a good option for those interested in the aviation industry. It’s essential to do your research, diversify your portfolio, and consider the long-term before investing in SIA’s stock.
If you would like to check out my top 5 list of dividend stocks in Singapore, be sure to check out the article in the link.
