The drybulk and tanker shipping market has been beat up by a supply/demand imbalance coupled with decreasing global trade over the past 2 ½ years. Due to the resulting low spot market rates, most public shipping companies, many of which are highly-leveraged, are struggling to turn a profit.
Most shipping companies have either dropped their dividend or are on the brink of dividend cuts due to low liquidity. However, there are five shipping companies that currently provide a strong play for the high-yield dividend investor.
Navios Maritime Partners (NMM):
- Yield of 12.4% (quarterly @ 44 cents); 15 consecutive dividends (100% since inception).
- Debt/Assets: 38.2%
- Debt/Equity: 65.4%
- Current Ratio: 1.2
- Market Cap: 790M
Knightsbridge Tankers Limited (VLCCF):
- Yield of 11.6% (quarterly @ 50 cents); 6 consecutive dividends (53/56 quarters since inception).
- Debt/Assets: 29%
- Debt/Equity: 41.9%
- Current Ratio: 6.3
- Market Cap: 423M
International Shipholding Corporation (ISH):
- Yield of 8.3% (quarterly @ 38 cents); 12 consecutive dividends.
- Debt/Assets: 40.7%
- Debt/Equity: 94.8%
- Current Ratio: 1.3
- Market Cap: 132M
Euroseas Ltd (ESEA):
- Yield of 7.6% (quarterly @ 7 cents); 15 consecutive dividends.
- Debt/Assets: 27.5%
- Debt/Equity: 40.4%
- Current Ratio: 1.8
- Market Cap: 114M
Nordic American Tanker Shipping (NAT):
- Yield of 5.93% (quarterly @ 30 cents); 41 consecutive dividends paid.
- Debt/Assets: 6.9%
- Debt/Equity: 7.5%
- Current Ratio: 10.2
- Market Cap: 875M
While these companies are truly in a rough market sector, their dividend history is strong and their balance sheets are solid. NAT is the safest play, but also has the smallest yield of the group. Based on the financial security alone, VLCCF is a solid play, but their EPS numbers have been struggling due to less favorable charters, leading many speculators to predict a dividend cut similar to 2009. In my opinion Euroseas offers the best tradeoff between security and dividend yield out of the five companies.
Disclosure: I am long NAT, ISH, NMM, ESEA.