After nearly a year of hearing and reading about challenges due to demand outrunning supply, there are indications that supply is catching up. Or perhaps demand is slowing due to inflation. The impact of recent COVID-19 lockdowns in China also has slowed demand in Shanghai for export vessels.
Two years ago, the Freightos Baltic Index (the spot market price for 40-foot shipping containers, or FEUs) was just under $1,500. The rate today is just over $8,200, but that is down from a peak price of $11,109 in early September of last year. Many shippers and industry analysts expect a sharp reduction in rates in the second half of this year.
U.S. retailers also are pulling their orders forward, stocking up now on expectations that inflation will continue to push their costs and the prices they charge their customers higher. There is also some uncertainty related to labor negotiations begun last week for workers at 29 ports on the west coast, including the country’s two largest in Long Beach and Los Angeles. The existing bargaining agreement expires July 1.
For investors, shipping companies that are now paying fabulous dividends may be faced with a choice of cutting those dividends or funding them by borrowing. The speed with which shipping companies can raise, lower, eliminate or initiate dividend payments is faster than in most other industries. According to one study published last October, the shipping industry’s speed of dividend adjustment “increases in recession states both in the macroeconomic and the shipping environment. The increased dividend flexibility of maritime companies appears to be in line [with] the sector’s high-risk profile. It seems that as profitability and external financing opportunities deteriorate during recession states, maritime companies adjust dividends more flexibly to secure sufficient liquidity and investment capital.”
Here is a look at seven maritime shipping companies that currently pay dividends of at least 9%.
ZIM Shipping
Zim Integrated Shipping Services Ltd. (NYSE: ZIM) is an international container shipping that announced a dividend of $17.00 in early March and paid the dividend on April 4. The company’s current dividend yield is 26.75%.
Net income for the last 12 months totaled $4.64 billion. Free cash flow per share for the period was $41.47, and the total return for the past year was about 135%.
Through the March quarter, the company had paid out common dividends of $299.4 million. The April dividend payment alone totaled about $2.04 billion. The company’s payout ratio for the past year is about 6.5%.
Star Bulk Carriers
Star Bulk Carriers Corp. (NASDAQ: SBLK) is a dry bulk shipper of grains, coal and other cargoes. The company pays a variable dividend, and over the past 12 months has paid out $4.25 for a dividend yield of 25.8%.
Net income for the last 12 months totaled $680.53 million. Free cash flow per share (LTM) was $6.23, and the total return for the past year was about 73.1%.
Through the March quarter, the company had paid out common dividends of $230.24 million. The company’s payout ratio for the past year is about 33.8%.
Genco Shipping
This is another dry bulk shipper. Including a payment made last week, Genco Shipping and Trading Ltd. (NYSE: GNK) has paid dividends totaling $1.71 for the past four quarters. The current dividend yield is 15.54%.
Net income for the last 12 months totaled $221.71 million. Free cash flow per share over the past year was $2.54, and the total return for the past year was 56.84%.
Through the March quarter, the company had paid out common dividends of $40.9 million. The company’s payout ratio for the past year is about 18.4%.
KNOT Offshore Partners
KNOT Offshore Partners L.P. (NYSE: KNOP) owns and operates shuttle oil tankers under long-term charters in the North Sea and Brazil. The company has paid dividends totaling $2.08 over the past four quarters. The current dividend yield is 12.52%.
Net income for the last 12 months totaled $72.52 million. Free cash flow per share over the past year was $3.77, and the total return for the past year was negative 0.9%.
Through the March quarter, the company had paid out common dividends totaling $40.9 million. The company’s payout ratio for the past year is about 151.3%.
Golden Ocean
This company owns and operates a worldwide fleet of dry bulk shippers. Golden Ocean Group Ltd. (NASDAQ: GOGL) paid dividends totaling $2.50 per share over the past year. The current dividend yield is 24.47%.
Net income for the past 12 months totaled 527.22 million, and free cash flow per share over the period was $0.58. The total return for the past year was 109.5%.
Through the March quarter, Golden Ocean paid out $320.69 million in common dividends. The company’s payout ratio is 60.83%.
Diana Shipping
Diana Shipping Inc. (NYSE: DSX) is a dry bulk shipper operating globally. Over the past year, the company has paid two quarterly dividends totaling $0.30. Prior to those payments, the company had paid no dividends since November 2008. The current dividend yield is 14.93%.
Net income for the past 12 months was $57.39 million, and free cash flow per share for the period was $0.94. Total return for the past year was 65.34%
Through the March quarter, Diana Shipping has paid a total of $8.82 million in dividends, and the firm’s payout ratio is 25.42%.
Eagle Bulk Shipping
Eagle Bulk Shipping Inc. (NASDAQ: EGLE) is a worldwide operator of dry bulk vessels. Over the past year, the company has paid three quarterly dividends totaling $6.05. The current dividend yield is 12.24%.
Net income for the past year was $228.12 million, and free cash flow per share for the period was $11.68. Total return for the past 12 months was 70.36%.
Through the March quarter, Eagle has paid $52.58 million in common dividends, and the company’s payout ratio is 23.05%.
Grindrod Shipping
Grindrod Shipping Holdings Ltd. (NASDAQ: GRIN) operates both dry bulk and tanker vessels worldwide. In the past 12 months, the company has paid two quarterly dividends totaling $1.44 and has a forward dividend yield of 12.08%
Net income for the past 12 months totaled $118.92 million, and free cash flow per share for the period totaled $11.08. Total return for the past year was 266.33%.
Through the March quarter, Grindrod has paid $13.55 million in common dividends, and the company’s payout ratio is 11.39%.
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