Key Highlights

  • Cargojet Inc. (TSX:CJT) pays a regular quarterly dividend, and the latest declaration located was CAD 0.35 per share for the fourth quarter of 2025, payable by 5 January 2026.
  • The stock carries an indicated Dividend yield of 1.63% at a current share price of CAD 94.41, and shares moved down 2.72% in the latest session.
  • Second-quarter 2026 Revenue rose 15.8% to CAD 275.8 million, with adjusted EBITDA of CAD 87.3 million.
  • Free Cash Flow was CAD 56.2 million in the quarter versus an outflow of CAD 72.5 million a year earlier, as Capital spending fell to CAD 54.3 million.
  • The Leverage Ratio eased to 2.6 times against a target below 2.5 times, and third-quarter results are due on 11 November 2026.

Introduction

Cargojet Inc. (TSX:CJT) runs Canada's largest overnight air cargo network and pays a regular quarterly dividend.

The stock carries an indicated Dividend Yield of 1.63% at a current share price of CAD 94.41, and shares moved down 2.72% in the latest session.

Attention now centers on whether a rebound in free cash flow, reduced aircraft spending and new pilot contracts leave comfortable room for the payout.

Company Overview

Cargojet (TSX:CJT) flies time-sensitive parcels across Canada overnight and also offers charter and aircraft, crew, maintenance and insurance services to international customers.

The operating fleet totalled 41 aircraft in the second quarter, made up of 16 B757-200, 2 B767-200 and 23 B767-300 jets.

Second-quarter revenue was CAD 275.8 million, up 15.8%, and net Earnings were CAD 7.0 million, or CAD 0.47 per diluted share, compared with a loss a year earlier.

Adjusted EBITDA reached CAD 87.3 million at a 31.7% margin, with on-time performance of 99.2%.

Dividend Profile

Cargojet distributes cash each quarter, and the latest declaration located was CAD 0.35 per share for October to December 2025, with a Record Date of 20 December and payment on or before 5 January 2026.

The indicated dividend yield of 1.63% at the current share price of CAD 94.41 is the figure used here for the regular payment.

The dividend is designated as eligible for Canadian tax purposes.

A newer declaration was not located, and any change to the quarterly amount would be announced by the company.

Dividend Sustainability Analysis

Earnings have been lumpy, but cash generation turned sharply positive in 2026 as aircraft purchases slowed.

The payment is modest against free cash flow, and the larger question is how leverage and labour cost evolve.

Payout Ratio and Earnings Coverage

Adjusted Earnings Per Share were CAD 0.67 in the second quarter versus CAD 1.02 a year earlier, and diluted earnings were CAD 0.47.

Against a quarterly payment of CAD 0.35, the distribution used roughly half of adjusted earnings and about three quarters of diluted earnings.

For six months, adjusted earnings of CAD 1.27 per share were well below CAD 2.64 in the prior year, which narrows the cushion.

Higher fuel prices diluted Margin percentages but were largely recovered through surcharges.

Adjusted Cash Flow Coverage

Operating cash flow was CAD 96.2 million in the quarter and CAD 166.1 million for six months, up sharply from CAD 28.0 million and CAD 92.8 million.

Capital spending dropped to CAD 54.3 million from CAD 100.5 million, producing free cash flow of CAD 56.2 million against an outflow of CAD 72.5 million.

The six-month figure was CAD 143.6 million, helped by CAD 65.6 million of aircraft disposal proceeds and related notes receivable.

On this measure the dividend appears comfortably funded, although disposal proceeds do not repeat indefinitely.

Balance Sheet and Leverage

The leverage ratio fell to 2.6 times at quarter end, still above management's goal of below 2.5 times.

Net Debt in dollars was not stated in the release reviewed.

A single B767-200 feedstock aircraft is being converted, adding CAD 10 million to CAD 15 million of 2026 capital spending and about CAD 5 million in 2027.

Liquidity

The release reviewed did not disclose cash or available credit, so Liquidity cannot be quantified here.

Free cash flow of CAD 143.6 million for six months and asset sale proceeds point to improving internal funding.

Share repurchases were modest, with 121,390 shares bought back during the second quarter.

Revenue Stability and Profit Trends

Six-month revenue rose 8.7% to CAD 530.5 million, but net earnings of CAD 11.1 million were down from CAD 44.8 million a year earlier.

Gross margin was 21.5% in the quarter versus 20.8%, and adjusted EBITDA grew 8.9%.

Block hours were essentially flat at 15,787, so growth came from pricing, mix and fuel pass-through rather than flying volume.

Management expects domestic overnight Demand to stay solid in the second half, aided by E-commerce growth in smaller markets.

Interest Rate and Commodity Exposure

Jet fuel is the main input cost, and surcharges recover most of it, though they dilute margin percentages by about 260 basis points.

Interest rates affect the cost of debt used to finance aircraft, and leverage above target raises that sensitivity.

The five-year pilot agreement effective 1 July 2026 raises wages by 26% and then 5% a year through June 2031, and management plans to recover the cost through pricing as contracts renew.

Counterparty Concentration

Revenue relies on a limited group of long-term customers, including postal, parcel and integrated carriers, and this concentration is a standing consideration.

Management said no contract-customer agreements expire in 2026 and the next expire in 2029 and 2030, which supports visibility.

Cost discussions are underway with certain customers, some on shorter terms, and pass-through of labour Inflation will test pricing power.

Management Commentary

Chief executive Pauline Dhillon said the quarter reflected the resilience of the Business model and credited the One Fleet strategy for placing Assets where returns are highest.

Chief financial officer Aaron McKay said he is focused on return on invested capital, and Executive Chairman Ajay Virmani stressed quality of revenue, yield management and exiting unprofitable business.

Management is evaluating growth in Europe, Africa, Asia and the Middle East, building on its Liege hub and a new Liege to Tel Aviv service.

Sector-Specific Dividend Risks

Air cargo operators carry heavy fixed costs for aircraft, crews and maintenance, so small changes in Volume or fuel can move profit.

Labour agreements, regulatory changes and fleet renewal needs create recurring calls on cash.

Red Flags

Six-month adjusted earnings per share fell to CAD 1.27 from CAD 2.64.

Leverage of 2.6 times sits above the stated target.

The new pilot contract adds a 26% wage increase that must be recovered from customers.

Block hours were flat, so volume is not driving revenue growth.

The latest dividend declaration located was from November 2025, and the third-quarter report was still pending.

Bull Case

Free cash flow of CAD 143.6 million for six months, lower capital spending and a falling leverage ratio support a steady payout.

Long contract terms, domestic e-commerce demand and expansion at the Liege hub could extend earnings growth.

Bear Case

Higher labour costs, softer volumes or pricing pushback from customers could erode margins and prolong leverage above target.

A return to heavy aircraft spending would absorb the free cash flow that currently covers the distribution.

Latest News and Developments

On 11 August 2026 Cargojet reported second-quarter results with revenue growth of 15.8% and free cash flow of CAD 56.2 million.

A five-year pilot agreement took effect on 1 July 2026.

The company scheduled third-quarter 2026 results for 11 November 2026.

The fleet was reduced to 41 aircraft from 43, in line with disposals during the first half.

Dividend Sustainability Rating

Rating: Moderately Sustainable

The quarterly payment is covered by adjusted earnings and by free cash flow of CAD 56.2 million in the second quarter.

The assessment weighs leverage of 2.6 times, six-month earnings below last year and a labour cost step-up.

The label would improve with sustained leverage below 2.5 times and wage costs recovered through pricing.

Investor Takeaway

Cargojet offers a regular payment with an indicated dividend yield of 1.63% at a current share price of CAD 94.41, supported by improving free cash flow.

Leverage, pilot costs and customer pricing are the main variables to follow.

Useful checkpoints include the 11 November results, the next dividend declaration, free cash flow and the pace of debt reduction.