Hold onto Chorus Aviation for the dividend, this portfolio manager says

Chorus Aviation (Chorus Aviation Stock Quote, Chart TSX:CHR) has been on a downward trend for much of 2018 but shareholders might think twice before selling, says Bruce Campbell of Campbell, Lee & Ross, who likes CHR’s dividend yield.

Halifax-based Chorus Aviation is a regional and charter airline operator whose wholly owned subsidiary is Jazz Aviation, under contract to Air Canada. The company has a total leased fleet of 78 aircraft, the latest of which includes a lease of four ATR72-600 aircraft to Southeast Asian airline Lion Air Group.

Leading up to 2018, the stock spent the better part of a half-decade climbing from a low of $1.87 in mid-2013 to a high of $9.82 by January of this year. Since then, CHR has lost 29 per cent of its value, with the company’s dividend yield currently at seven per cent.

Campbell says that even with the decline in value, the stock should be a safe hold.

“Chorus really has Air Canada as its primary client,” says Campbell, president and portfolio manager at Campbell, Lee & Ross, to BNN Bloomberg. “They had resigned a contract with Air Canada so that near-term risk has gone away. The yield was holding it up for a while and it has pulled back like everything else.”

“It’s not for me because I’m not a fan of the airline industry, but I think if you held it, I would hold onto it because the dividend is not in danger like it was two years ago,” he says. “It’s a nice hold for the dividend.”

Chorus last reported its quarterly financials on August 9, where it generated revenue of $378 million, representing a 17 per cent year-over-year increase, and adjusted EBITDA of $29 million, representing a nine per cent increase.