The stock market has seen immense volatility lately, as investors try to figure out what impact the coronavirus pandemic will have on various parts of the economy. Already, the airline industry has come to a near standstill in response to the restrictions that national governments have put on international travel and the reluctance of domestic travelers to put themselves at any kind of risk of catching the COVID-19 disease.

Airlines have lobbied Washington lawmakers to get relief, and it now looks as though Congress has agreed on a deal that could provide billions of dollars in loans and other financial support to air carriers. However, that aid is almost certain to come with a catch: Those receiving it won't be able to do stock buybacks or pay dividends to shareholders until a year after they've paid back the federal government.

Calculator, glasses, money, and notebook with pen and word Dividends written.

Image source: Getty Images.

Dividend investors always hate to see payout cuts. Most airlines haven't been all that generous in making dividend payments to shareholders, but one in particular -- Delta Air Lines (NYSE:DAL) -- has stood out from the crowd. The Atlanta-based carrier has already chosen to suspend its dividend in anticipation of taking government assistance of almost $1 billion -- which means less in dividend income annually for those who've invested in Delta. As it turns out, that cut will dwarf what most other major carriers have paid.

Once burned, twice shy

The history of airlines has been full of booms and busts. Several major airlines have gone through bankruptcy proceedings, making them leery of returning too much capital to shareholders during good times, only to wish they'd hung onto it when the bad times come. Moreover, with consolidation in the airline industry, many companies needed to preserve capital for use internally in integrating operations and streamlining fleets.

Even the decade-long era of prosperity for airlines wasn't enough to give every airline confidence to pay out substantial dividends. With the need to update aging aircraft fleets, capital remained at a premium for most air carriers.

As you can see below, though, there were a few exceptions:

Airline Stock

Recent Yield

2019 Dividend Payments

Delta Air Lines

6%

$980 million

Southwest Airlines (NYSE:LUV)

1.9%

$372 million

American Airlines Group (NASDAQ:AAL)

2.9%

$178 million

Alaska Air Group (NYSE:ALK)

5.2%

$173 million

Allegiant Travel (NASDAQ:ALGT)

3%

$46 million

SkyWest (NASDAQ:SKYW)

2.3%

$24 million

Hawaiian Holdings (NASDAQ:HA)

4.7%

$23 million

Data source: S&P Global Market Intelligence.

Delta clearly stands out here and was one of the first to embrace dividends and payout growth. Back in 2013, the air carrier started a dividend of just $0.025 per share, amounting to a yield of less than 1%. Later that year, it more than doubled its payout, and subsequent increases since then took the quarterly payment all the way up to $0.4025 per share. Before the coronavirus hit, that worked out to a healthy dividend yield of nearly 3%.

Smaller impacts

By contrast, other airlines haven't been big dividend payers. Southwest, which has been the most consistently successful airline over time, has embraced dividend growth to some extent over the past 10 years, but at today's depressed prices, its yield remains below the overall stock market average.

American pays a dividend, but it hasn't changed since the airline started its payout in 2014. Only Alaska Air has demonstrated a similar commitment to dividend growth to that of Delta, and its much smaller size means less of a financial impact on dividend investors overall.

More cuts to come elsewhere?

So far, dividend stock investors have seen payout cuts limited largely to the industries most directly affected by the coronavirus pandemic. The real question is whether the economy will recover quickly enough to help minimize second-order effects on businesses in other sectors of the economy. If that recovery doesn't happen, then dividend investors could see themselves facing more extensive reductions to their portfolio income well beyond the hardest-hit industries.