Should You Buy DAL Stock Now After Recent Dividend Hike?

Delta Air Lines’ DAL board of directors recently announced a 25% hike in its quarterly dividend payout, raising this airline heavyweight’s quarterly cash dividend to 18.75 cents per share (75 cents annualized) from 15 cents (60 cents annualized).DAL’s dividend rose steadily from 6 cents per share in 2013 to 40.25 cents by early 2020 before being suspended due to the pandemic. Payments resumed in early 2023 at a reduced 10 cents per share. In mid-2024, the dividend was increased by 50% to 15 cents, followed by a 25% hike in mid-2025 to 18.75 cents per share. This is encouraging, as stocks with a strong year-over-year dividend growth history often offer a greater scope of capital appreciation than simple dividend-paying stocks.The hiked dividend will be paid out on Aug. 21, 2025 to shareholders of record as of July 31, 2025.DAL management’s decision to increase its quarterly dividend payout reflects the company’s commitment to boosting shareholder value, apart from underlining confidence in its business.DAL offers a current dividend yield of 10% compared with the Zacks Transportation- Airline industry’s 1.54%. Given this shareholder-friendly move, the question naturally arises whether we should buy DAL stock at current levels.  Let’s delve deeper.Positives for DAL StockDAL Stock Is Inexpensive Relative to SectorDAL is currently trading at an attractive valuation, making it potentially appealing to value investors. Its low price/sales ratio suggests the stock might be undervalued relative to its future revenue potential, especially compared to the industry average.In terms of the forward 12-month price/sales ratio, DAL is trading at 0.52, lower than the sector’s 0.59. The reading is also below its median over the last five years. The company has a Value Score of A.Image Source: Zacks Investment ResearchDAL & Other Carriers Benefit From Rosy DemandDelta grabbed attention by adding extra flights and increasing capacity for the Consumer Electronics Show 2026, aiming to capitalize on high travel demand during the major tech event. To cater to the increased demand, another airline company, JetBlue Airways JBLU, through its subsidiary, Paisly, expanded its cruise portfolio by partnering with four additional cruise lines, enhancing its travel offerings and customer experience.Similarly, European carrier, Ryanair RYAAY, has been reporting strong traffic numbers again due to the upbeat air travel demand scenario.DAL Stock Price PerformanceDAL shares have outperformed fellow airline JetBlue in a year. However, Ryanair has performed even better. Shares of Delta have gained 2.3%, JetBlue has fallen 11.2%, and Ryanair has risen 5% in a year.Image Source: Zacks Investment ResearchDAL’s EPS Estimate Revisions Seem UnfavorableGeopolitical uncertainty, tariff-related pressures and persistent inflation are disrupting DAL’s operations and weakening travel demand, especially in the international and business segments. These challenges are causing volatility in passenger traffic and limiting the airline’s ability to maintain strong yields and consistent revenue growth.Rising costs and softening demand are also preventing Delta from fully optimizing its network and operating at peak efficiency. The airline is struggling to scale effectively in the face of economic headwinds, with inflation driving up key expenses like labor. Due to the difficult revenue environment, Delta has issued a cautious outlook for the second quarter of 2025, projecting adjusted revenues to either fall 2% or increase up to 2% year over year.Analysts are seemingly turning pessimistic on the stock and revising earnings estimates downward over the past 30 days.Image Source: Zacks Investment ResearchOther Headwinds Faced by DAL StockDelta faces financial pressure from rising operating expenses, particularly driven by increased labor costs. In the first quarter of 2025, labor expenses, making up more than 30% of total operating costs, climbed 8% year over year to $4.1 billion, weighing on the company’s profitability.Compounding these cost challenges, Delta’s low current ratio of 0.38 highlights potential liquidity concerns. With a ratio well below 1, the company may struggle to cover its short-term liabilities, signaling a need for improved cash management or near-term financing strategies.How to Play DAL Stock Now?Despite the recent pro-shareholder move of hiking its dividend, we believe caution is warranted, given the near-term concerns associated with DAL stock. Despite signs of easing trade tensions, we do not expect the trade-related uncertainty to dissipate until a concrete long-term trade deal is in place. As a result, due to tariff-related uncertainty, DAL is likely to continue suffering from sluggish air travel demand, at least in the short term.Instead of rushing to invest in DAL, which currently carries a Zacks Rank #3 (Hold), it is prudent to wait for a more advantageous entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ryanair Holdings PLC (RYAAY): Free Stock Analysis Report Delta Air Lines, Inc. (DAL): Free Stock Analysis Report JetBlue Airways Corporation (JBLU): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks