BA Stock Forecast: Will Boeing stock recover? Five reasons to be optimistic, also on dividends

• NYSE: BA has been rising in recent days, but remains a shadow of its former self. 
• Two significant orders for Boeing planes are behind the current push.
• Three broader trends may also support embattled plane maker's prospects. 

The world has recently marked one year to the coronavirus crisis and investors in Boeing Co (NYSE: BA) two years to the second crash of the 747 MAX – and things may be looking better. Vaccines and a change of management at the aerospace company have respectively contributed to better prospects and share prices have risen from their lows near $100. 

Hovering around $250, can BA continue its upward march? There are five reasons to remain optimistic about Boeing. 

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1) MAXimizing order

Southwest Airlines (LUV) is doubling down on orders of 737 MAX kets, adding an additional 100 planes to 250 and with an option to purchase an additional 270 through 2031. One of the US airline's aims is to reduce fuel efficiency and thus reduce its carbon footprint – a move that fits into the current trend toward green investment. A reduction of 14% in burning jet fuel may attract more buyers.

The 737-MAX suffered two fatal accidents in 2018 and 2019, killing hundreds of people and causing a suspension in producing the jets. Investigations unveiled wrongdoing which forced Boeing to cough out $2.5 billion. However, the last-generation narrow-body planes have returned to the skies without incidents since December and Southest's order is a vote of confidence. 

2) Larger 787 ready for take-off

While the 737-MAX competes with Airbus' 320 series of planes for short routes, the 787 is a twin-aisle jet used for longer flights. Nevertheless, also this aircraft had quality control issues which halted its deliveries and caused investors to shiver. These issues seem over now. Boeing will resume shipments of these planes to customers worldwide. 

Long-haul flights with the 787 Dreamliner may have to wait for long as large parts of Asia remain partially closed for travel. Nevertheless, looking toward the post-pandemic world, being able to sell leading long-haul planes is good news for Boeing. 

3) Revival of US industry

American manufacturing is firing on all cylinders – a significant change for the world's richest economy, which became a services-based society. The importance of working-class voters to tipping the elections, globalization which pushed jobs away, and also the covid crisis can explain the change. 

The just-in-time supply chains which heavily relied of instant shipments from abroad have come into doubt with shortages of critical medical equipment and strengthened the need to build at home. Even the latest Suez Canal blockage may add to building in America.

Stocks of industrial companies are rising fast and prospects for the future are also improving, as shown below:

Source: The Economist

Even if Boeing – founded in 1916 –  is seen as an old-school industrial company rather than a shiny technological one, investors may scoop it up as part of a basket of industrial shares. The aerospace firm has no significant domestic competitors in passenger planes and may see its value rise. 

4) Infrastructure spending

President Joe Biden is set to present a vast infrastructure spending plan, which may adopt a two-pronged approach. While Wall Street is worried about potential tax rises, any such investment would undoubtedly have a substantial emphasis on green technologies.

Jet fuel is one of the most carbon-emitting combustibles and having electric planes traverse the oceans may take dozens of years to develop. However, Boeing may still benefit from the program in two ways. First, America's airports need an overhaul, which would increase flights and demand for jets down the line.

Secondly, while flying hurts the environment, the aforementioned 14% reduction in burning fuel will certainly be smiled upon in the White House. 

5) Rapid vaccine rollout

Around 90% of Americans will be offered a vaccine by mid-April, paving the way for reaching 100% by May 1. The UK is also immunizing its population at a rapid rate. While Europe is lagging behind, quicker manufacturing of vaccination doses should allow a faster return to air-travel. 

Significant stimulus and saving money for long period may lead to "revenge tourism" in which those that kept on working could splurge their savings on travel. In turn, that could also boost Boeing's shares.

Is BA still paying dividends?

Boeing Co. (NYSE: BA) has ceased paying dividends in 2020 but may still reinstate payouts to shareholders in 2021. The firm's better prospects imply it could do so once its free cash flow improves. Dave Calhoun, who took over as CEO at the unfortunate timing of January 2020, seems focused on turning around the company's profits and getting planes back to the air before pouring money on those holding the stock.

However, if shares indeed rise, that would serve as a payout or dividend to existing shareholders. NYSE: BA closed Monday's session at $25.52, up some 2.26% after the 737 and 787 news, but still below the 52-week high of $278.57. Shares hit a peak above $400 before that second fatal crash in 2019 and there is still a long way to go, despite doubling from the 52-week trough of $113.89.

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