Ryanair shareholders cheered last week after the company announced record profits and its first regular dividend. Dividends are not new to Ryanair – it paid out €6.74 billion in dividends and buy-backs between 2008 and 2020 – but this is the first commitment to regular payouts, equating to 25 per cent of profits.
It’s a confident gesture, given Ryanair must still pay some $40 billion (€37 billion) to Boeing after ordering 300 new planes earlier this year. It’s a far cry from 2003, when Michael O’Leary promised Ryanair would never pay a dividend “as long as I live”.
O’Leary, a 3.9 per cent shareholder, remained cool on dividends even after Ryanair reversed course, saying in 2013 that he wasn’t “here for the piddly dividends” and that he instead wanted to “double or triple” the share price.
Ryanair subsequently did just that, but recent times have been lean, with the stock (around €16.50) still below 2017′s record high. That will change, says Bank of America (BofA), which has a €25 price target on the shares.
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Ambitious? Perhaps, but BofA notes Ryanair trades on an undemanding valuation of just nine times 2024 estimates – well below its average price-earnings ratio of 13 over the past decade.
