I flew into Cabo San Lucas, Mexico a few months ago and made the mistake of exchanging my money at the airport rather than a local bank or financial institution. If drinking the local water is mistake #1, then this one isn’t far behind. I was paid an exchange rate of just 15/1, so my $1,000 turned into 15,000 pesos. Had I walked a few blocks away, the going rate was closer to 18/1 — meaning I could have traded my dollars for 18,000 pesos instead.  

#-ad_banner-#3,000 pesos buys a lot of Pacifico beer.

And this isn’t just my experience — the Mexican peso has been one of the weakest currencies in the world for the past three weeks.

Since November 8, its value has fallen more than 15% against the U.S. dollar. That selloff is largely being driven by U.S. President-elect Donald Trump.

Investors are worried Trump will restructure trade agreements between the United States and Mexico or levy tariffs on Mexican exporters. If that happens, it could be a huge drag on the Mexican economy.

The weak peso has caused somewhat of a panic in Mexican stocks. In the past three weeks the iShares MSCI Mexico Capped (NSYE: EWW) is down 11%. Take a look below.

However, hiding beneath this pessimism is a great opportunity.

While a weak peso would weigh on certain industries, it is a profit trigger for one of Mexico’s largest airport operators that also offers the industry’s best dividend yield at 10.1%.

Grupo Aeroportuario (Nasdaq: OMAB) is the fourth largest airport operator in Mexico. OMAB operates 13 international airports in nine states in the central and northern parts of Mexico under a 50-year concession from the Mexican federal government. Its network of airports services more than 15 million travelers every year. That includes service to popular tourist destination Acapulco and the country’s third-largest business district in Monterrey.

OMAB was incorporated in 1998 as part of the Mexican government’s privatization of its airline industry.

The company operates in two divisions — aeronautical and non-aeronautical services. Its aeronautical division generates revenue from charging flight, landing, parking and baggage, and security fees. Its non-aeronautical division generates revenue from leasing airport space to airlines and restaurants and retailers. About 45% of the company revenue comes from passenger charges.

Shares are listed on the Mexico Stock Exchange and available to U.S. investors as ADRs on the NASDAQ stock exchange.

OMAB Will Benefit From A Weak Peso
Tourism is a big part of the Mexican economy. In 2015, Tourism was the fourth-largest industry in the country, accounting for around 10% of total gross domestic product.

The weak peso has Mexico’s tourism industry on sale, particularly for people in the United States. I expect the weak peso to attract a record number of tourists into Mexico in 2017. Today, the exchange rate is more than 20/1 — meaning every dollar will stretch 10% further than it did before the election. And almost every one of these tens of millions of tourists will be passing through the country’s wide network of airports.

As the country’s fourth-largest airport operator, there are few companies in the country better positioned to capitalize on this trend. But even if the Street has it wrong and the peso strengthens in the coming months, I still expect OMAB to deliver record revenue in 2017.

Mexico’s Air Travel Industry Is In A Secular Bull Market
The U.S. air travel market is mature. Its days of outsized growth are long gone.

South of the border, it’s a different story.

As Mexico’s middle class grows, Mexico’s air travel industry is in a bull market. Mexican domestic traffic has increased between 10% and 15% for the last five years.

International traffic has also been growing every year between 8% and 12%. Looking forward, I expect the industry to keep thriving for years to come, particularly because of a recent trade agreement between the U.S. and Mexico.

On July 22, 2016, the U.S. and Mexico enacted the Air Transport Agreement. This new agreement clears the way for any U.S. airport to offer direct flight services into Mexico, setting the stage for additional cargo and passenger routes between the two countries.

OMAB Is Positioned To Capitalize On Higher Air Travel Volumes
OMAB is uniquely positioned to capitalize on growing air traffic in and out of Mexico.

It currently operates under a 50-year license with the Mexican federal government. This irreplaceable asset gives OMA exclusive rights to operate 13 airports, protecting the company from upstart companies or price gouging from current rivals.

Beyond the power of its exclusive rights, OMAB is also at the tail end of a 5-year expansion strategy, investing more than $100 million into increasing operating capacity and profitability. For example, in July of 2016 OMAB began construction on a new passenger terminal for its Acapulco airport. The new terminal is expected to be able to handle up to 1.3 million domestic and international travelers per year.

OMAB is also expanding its non-regulated offerings, from which it derived about 25% of revenue in 2015. In March of 2015, OMAB inaugurated the first building of the new industrial park located within its Monterey Airport. This new facility includes large warehouses that OMAB is leasing to corporate customers in the auto and aerospace industries that need close proximity to east flight channels.

And in August 2015 OMAB announced the opening of the Hilton Garden Inn at its Monterey Airport.

OMAB’s Yield Is The Best In the Industry
OMAB has been reliably paying a quarterly dividend since 2007. Today, it is the best dividend payer in Mexico’s airport industry.

The company has a fairly unique dividend policy — devised of a fixed dividend payment and a variable dividend payment. On the fixed side, OMAB pays out $22 million per year to shareholders. The variable component is based on the funds available for distribution in excess of the fixed component, taking into account the next 12 months’ scheduled investments and the next 6 months’ expected operating expenses.

With revenue on pace to hit a new record in 2016, OMAB’s dividend has been surging. In the last two years, its dividend payment has more than doubled. Take a look below.

Those increases have OMAB offering a current yield of 5.3%, the best dividend in the industry and a 165% premium to the S&P 500.

Risks To Consider: Mexico levies a 10% tax on foreign dividend payments. However, U.S. citizens can qualify for a foreign tax credit on foreign dividend payments with IRS Form 1116.

Action To Take: OMAB is an industry leader in a growth industry. In the short run, the weak peso is a profit trigger for OMAB. Its 10.1% dividend yield is the best in the industry and a massive premium to the S&P 500. Buy shares below $45.00 and collect a great dividend while enjoying long-term growth.

Editor’s Note: Everyone knows that dividend payers crush other stocks. It’s not a matter of opinion. You can just look at the stats. But what’s really interesting is why they do so much better. We’ve found the answer here.