Qantas Share Price Recently Hit an All-Time High: How far Can it Fall?

At time of writing, the share price of Qantas Airways Limited [ASX:QAN] is down 1.31%, trading at $6.76.

After the Qantas share price hit an all-time high of $7.02 on 13 November, it is now posting its second loosing session.

As you can see in the below chart, its all-time high coincided with a RSI spike just above 70, which indicated it was overbought:

ASX QAN - Qantas Share Price

Source: tradingview.com

The Relative Strength Index (RSI) is one of many indicators used to track a stock’s momentum.

We look at two factors that have played a role in the rise in the Qantas share price and present five dividend stocks, one of which is closely related to what Qantas has been doing with its fuel contracts.

The last pick in our Top Five Dividend Stocks, is closely related to what Qantas is doing with its fuel.

Qantas share price has been on a great run but could be set for further pullback

If you had bought Qantas shares a year ago, you would be looking at a healthy 17% return.

For such a big stock, that’s not bad.

The Qantas share price has been positively influenced by a recent off-market share buy-back, which finished on 4 November.

The buy-back came to the tune of $443.2 million and the company wound up buying back 5.1% of Qantas shares.

Another factor aiding the remarkable rise for Qantas shares was the fact it reported record revenue of $4.56 billion in the first quarter of FY20.

This came on the back of growth in international revenue and a reduction in competitor capacity.

Revealed: The best dividend payers to own now (not the banks).

Where does Qantas share price go from here?

It is possible a further pullback could occur as the RSI edges closer to 50.

That being said, I think this this could be tempered by the fact that Qantas currently has a dividend yield of around 3.65%.

The hunt for yield, however small, is well and truly on.

Low interest rates are largely responsible for this.

One final super intriguing note on Qantas and dividends…

In its 24 October update, Qantas revealed that it has fully hedged its fuel for FY20. It expects to drop $3.98 billion on fuel and in a worst case scenario, $4.05 billion. That’s a very small discrepancy.

I think this is major news.

It means Qantas is playing it safe on oil prices — locking in fuel for the next year.

This could mean that the last dividend play discussed in our ‘Top Five Dividend Stocks’ has significant upside in the year ahead. It’s a controversial tip, but as Matt Hibbard explains there’s plenty to like about this energy producer. Get our insights on the company and four other dividend stocks here.

Regards,

Lachlann Tierney,

For Money Morning


Lachlann Tierney is a writer for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently he has been working with Ryan Dinse. Ryan is involved in three publications:


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