Why you should be loading up on aviation services stocks

Better strategic picks than airlines.

"Recessions and shocks to the industry notwithstanding, global air traffic had been on a long-term uptrend and looks set to grow at 5% pa over the next 20 years. Aviation services companies have a less cyclical earnings profile than airlines and therefore offer a more defensive exposure to this long-term uptrend," said Maybank Kim Eng.

"Driven by the highly cash generative nature of their businesses, aviation services companies exhibit solid FCF profiles, allowing them to pay high dividends to shareholders," it added.

The research firm expects the sector to offer dividend yields of 4.6-5.1% in the year ahead.

"We believe these defensive dividend plays would continue to find favour in the current weak market conditions," explained Maybank Kim Eng.

Among the three aviation services companies, the research firm named SIAEC as its top ick since "it is a pure play to the avian growth story in the region."