It’s been a brilliant year for the easyJet (LSE: EZJ) share price, but that’s not the only thing investors have to celebrate. It’s been a good year for the FTSE 100 stock’s dividends too. Yet can both continue to soar in 2025?
The low-cost airline and holidays operator has bounced back from a volatile few years. Its stock has now jumped 19.54% over the last 12 months, and 58.63% over two years.
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Its dividend growth has been even more spectacular, as new research from AJ Bell shows. Only one stock on the FTSE 350 has increased its dividend at a faster rate this year: FTSE 250-listed Spire Healthcare Group, which hiked it by a blockbuster 320%.
I’m wowed by this dividend growth star
easyJet was in second place after lifting its dividend by a blockbuster 169%. While impressive, this obviously comes with a major proviso.
The share price took a massive beating in the pandemic, and struggled to take wing as the cost-of-living crisis followed. As revenues and profits plunged, it didn’t pay any dividends for four years. So it’s playing catch-up.
That huge percentage dividend hike – which reflects an increase from 4.5p per share to 12.1p – shows it’s catching up at speed. We can’t expect another triple figure jump next year, but there’s still plenty to look forward to, according to AJ Bell investment analyst Dan Coatsworth.
Analysts are forecasting that the dividend per share will hit 14.7p in 2025, he says. That’s an increase of 21.5%, which is more than seven times forecast inflation of 3%, if it happens. The dividend per share is forecast to climb by another 7.48% to 15.8p in 2026. The forecast yield is 2.52% for 2025 and 2.68% for 2026.
I’m optimistic about 2025 too
Coatsworth says super-fast dividend growth says investors a lot about management’s confidence in the future “in the same way as a director spending a large sum of their own money on their company’s shares”.
The 18 analysts offering one-year share price forecasts for easyJet have produced a median target of 708.6p. If correct, that’s an increase of 20.8% from today. Twelve name it a Strong Buy, three a Buy while five say Hold.
easyJet is flying but every stock faces potential turbulence. Middle East turmoil has disrupted routes and driven up fuel prices. Air traffic control delays and industrial action are running at what the board calls “too high a level”. It was forced to dole out £187m in compensation to passengers under EU rules, albeit down from last year’s £211m.
On 27 November, easyJet still managed to post a 34% rise in pre-tax profit to £610m, with revenues up 14% rise to £9.3bn. The group’s holidays arm is doing nicely. Consumers are still feeling the squeeze and growth may slow from this high point.
EasyJet shares still look good value to me, with a price-to-earnings ratio of just 9.51. While I wish I’d hopped on board earlier, I don’t think it’s too late to buy them. I’ll consider doing so when I have the cash.
