Image source: easyJet plc
It has been a brilliant year for easyJet (LSE:EZJ) share price, but that's not the only thing investors have to celebrate. It's been a good year for him FTSE 100 stock dividends too. However, can both continue to rise in 2025?
The low-cost airline and holiday operator has recovered from a volatile few years. Its shares have risen 19.54% in the last 12 months and 58.63% in two years.
Its dividend growth has been even more spectacular, as new research from AJ Bell sample. Just one action in the FTSE 350 has increased its dividend at a faster rate this year: FTSE 250-list Needle health care Clusterwhich increased it by a successful 320%.
I'm captivated by this dividend growth star
easyJet came in second place after increasing its dividend by a spectacular 169%. While impressive, this obviously comes with an important condition.
The share price took a hit during the pandemic and struggled to recover when the cost of living crisis followed. As revenue and profits fell, it paid no dividends for four years. So it's all about catching up.
That huge percentage increase in the dividend – reflecting a rise from 4.5p per share to 12.1p – shows it is catching up quickly. We can't expect another three-figure jump next year, but there's still a lot to look forward to, according to AJ Bell investment analyst Dan Coatsworth.
Analysts predict the dividend per share will reach 14.7p in 2025, he says. That's a 21.5% increase, more than seven times the expected inflation of 3%, if it happens. The dividend per share is forecast to increase by a further 7.48% to 15.8p in 2026. The expected yield is 2.52% for 2025 and 2.68% for 2026.
I am also optimistic about 2025
Coatsworth says super-fast dividend growth tells investors a lot about management's confidence in the future “in the same way that a director spends a large sum of his own money on shares of his company”.
The 18 analysts providing easyJet one-year share price forecasts have produced an average target of 708.6p. If correct, that represents a 20.8% increase from today. Twelve call it Strong Buy, three Buy and five say Hold.
easyJet is flying, but all shares face potential turbulence. The turmoil in the Middle East has disrupted routes and raised fuel prices. Air traffic control delays and strikes are occurring in what the junta calls “too high a level”. It was forced to hand out £187m in compensation to passengers under EU rules, although less than the £211m last year.
On 27 November, easyJet managed to record a 34% rise in pre-tax profits to £610m, and revenue rose 14% to £9.3bn. The holiday section of the group is doing very well. Consumers are still feeling the pressure and growth may slow from this high point.
EasyJet shares still look like good value to me, with a P/E ratio of just 9.51. While I wish I had jumped on board sooner, I don't think it's too late to buy them. I'll consider doing it when I have the cash.
