Vladimir Senkov

Frontline's Dividend Yield, Tanker Demand Compelling Indeed

How secure is the $6 per share dividentd in light of the strategy adopted by the board "to seek to have a normalised quarterly dividend target of $0.625 per share or $2.50 total per share per year"?
I don't have any problem with FRO, in fact, I'm long FRO at the moment. But I think it's unsafe to buy FRO now based on the expected 16% yield. Or you may be unpleasantly surprised towards the end of November.
I'm now in doubt, should I buy protective puts to avoid being hit with the mass exodus by dividiots at the end of November if the dividend is to be indeed reduced? Or should i hope that whatever the board seeks to do won't be done this time? I guess i still have time to think this over. If FRO recovers to over 40 before then, I may consider selling some covered calls or selling part of the position and bying december puts to hedge against possible dividend cut.

Smoother Seas Ahead for Frontline?

Sorry, screwed up the post.
Here we go again:

While I can't argue with the fact that FRO is trading in it's $30s, I'm not so sure about the 16%. According to the company website <blockquote cite="">The Board has adopted a strategy whereby the Company will seek to have a normalised quarterly dividend target of $0.625 per share or $2.50 total per share per year.</blockquote&g...
$2.50 a year is not bad, but it's not $6 and I believe you are factoring $6 to get 16%.

Smoother Seas Ahead for Frontline?

While I can't argue with the fact that FRO is trading in it's $30s, I'm not so sure about the 16%. According to the company website <blockquote cite="The Board has adopted a strategy whereby the Company will seek to have a normalised quarterly dividend target of $0.625 per share or $2.50 total per share per year">.
$2.50 a year is not bad, but it's not $6 and I believe you are factoring $6 to get 16%.