Aircraft manufacturing firm Boeing Co. (NYSE:BA) has had a turbulent end to 2019, but with Boeing stock up 4% on Tuesday morning, investors are starting to question whether or not this could be the start of a sustainable rally for the airplane maker. The main cause for BA’s stock price rise was the board’s decision to reward shareholders with a dividend hike and a buyback plan, but is that enough to go on?

Here’s a look at both sides of the argument.

Booming Business

On Monday, Boeing’s board agreed to raise the firm’s quarterly dividend payments by 20% to $2.05 per share. On top of that, the board approved a buyback plan worth $20 million. The news certainly sends a message to shareholders — BA management is confident about the firm’s future.

There are a lot of reasons to like Boeing stock. For starters, the company has been historically well-run, with a solid balance sheet and efficient operations. On top of that, the company’s outlook for future plane deliveries looks rosy — the firm is due to deliver 568 commercial aircraft before the end of the third quarter. 

Plus, the company’s new services arm is expected to continue adding to BA’s overall revenue growth, as the firm continues to build out the offering. By offering a service program to maintain BA aircraft, Boeing has been able to create a high-margin business with a reoccurring revenue stream. 

The other reason some analysts are bullish on BA is defense spending. Most are expecting to see government spending on defense rise over the next year and that should help bolster BA’s defense business, which makes the majority of its money in the US.

Not All Roses

With all of that in mind, buying Boeing stock might look like a no-brainer, but there are plenty of good reasons to be cautious as well. Perhaps the biggest reason some are cautious is the potential for an economic downturn. Boeing has benefited from strong air travel demand, but, when times are leaner, the airline industry tends to be hit hard. The first thing companies cut when things get tough is their travel budget and the same is true for average families. If that demand does start to waver, BA will feel the pain dramatically.

Another concern is the ongoing tension between the US and China. Although no new trades tariffs are expected over the next few months, an agreement between the two nations doesn’t look likely anytime soon. That’s a problem for Boeing, which sells commercial aircraft to Chinese airlines. The larger, longer-term picture for Boeing depends heavily on growth within China, something that might be tepid for the time being while trade tensions run high.

Plus, it’s worth mentioning that Boeing isn’t totally off the hook for the crash suffered by Lion Air. There is some contention about whether the jet in question was maintained improperly by Lion Air or if Boeing’s instruction manuals were clear enough. It’s difficult to place blame on BA, especially considering that the manuals were ultimately approved by the FAA. But that didn’t stop Lion Air co- founder Rusdi Kirana from threatening to cancel the firm’s future orders with Boeing. 

The Bottom Line on Boeing Stock

At the end of the day, the question as to whether or not to buy BA stock depends heavily on your economic outlook. A global economic slowdown would have a major impact on Boeing stock and continued tension between China and the US is almost certain to make a short-term dent in the company’s growth story.

However, if you’ve got time and you’re willing to strap in for some turbulence over the next few months, BA stock isn’t a bad bet. The company’s commitment to rewarding shareholders and its visible growth trajectory make it a great company for long-term investors to hold. I’d expect that the issues with Lion Air will continue to hurt Boeing as more news comes out, but overall that incident is unlikely to make a major dent in the firm’s success. 

As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.