Two dividend plays in the travel sector

Here are two stocks from the travel sector income-oriented investors may want to consider booking.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Looking for alternatives to a term deposit? Here are two ideas from the travel sector, offering both the chance for income and long-term capital appreciation.

The first offers a 4.6% fully franked dividend, while the second offers a near 3% fully franked dividend attached to a high quality holding for your portfolio.

Idea #1: Wotif.com 

Shares of Wotif.com Holdings Limited (ASX: WTF) have languished year to date, rising just 4% versus a corresponding 13% rise in the S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO). This is in part attributable to impacts from the Aussie dollar — when it was high, just weeks ago, the market wasn't very excited about Wotif's primarily domestic travel business.

Wotif.com is Australia's most visited online travel agency, according to Hitwise, and sells one out of every 10 hotel bookings domestically — including nearly 2 million such bookings and 3.5 million total room nights sold in the most recent half.

Now, with the Aussie dollar lower, this company's prospects look a bit brighter, and the company has a new CEO at the wheel as well, Scott Blume, who has previously worked in senior leadership roles with Traveland and Travelocity/Zuji Asia Pacific. Additionally, Wotif.com has an enviable balance sheet, with little debt and $150 million in cash. Shares trade for 20 times trailing earnings, or on EV to EBITDA basis of 12.8.

Income-oriented investors will be pleased to note the shares also pay a dividend in the 4.6% range, fully franked.

Idea #2: Flight Centre

While Flight Centre Limited (ASX: FLT) doesn't currently offer a dividend as high as Wotif.com's, the shares could still make an excellent long term holding. With the strength of its management team and long experience in the sector, Flight Centre may be one to book.

That's because this longtime stalwart of the travel business boasts strong brand awareness and market share in its core markets, Australia and the UK, and a growing presence in both the U.S. and China. As evidence, on the strength of these prospects, Flight Centre recently raised its full year profit guidance from between $305 and $315 million to between $325 and $340 million.

Currently, Flight Centre shares trade for 19 times earnings and on an EV to EBITDA basis of 9.6. The shares pay a fully franked dividend is in the range of 3%.

In the market for even more high yielding ASX shares? Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

Motley Fool contributor Catherine Baab-Muguira has no financial interest in any of the companies mentioned in this article. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

 

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »