Ecomike

Are Shippers’ High Dividend Yields Sustainable?

You missed some key research. Many of those shippers you listed, like DSX and DRYS canceled their dividends late last year. Others like NMM, NM, and PRGN are not even listed in your list above. EXM is also missing?

PRGN reduced it's dividend to a reasonable size recently, to $.05/quarter, about 5% yeild of current stock price, and about 13% of earnings. It's PE is still under 2.0 right now and it is way underpriced compared to others like DRYS.

I currently own PRGN & NM, and I sold DRYS and sold EXM some time ago.

Another issue is debt. DSX has virtually no debt, which is the reason it has a higher PE. With no debt it can still make money at shipping rates roughly 1/2 those needed by DRYS or EXM due to their debt loads and P & I payment costs that affect profits and cash flow.

DSX is raising cash from stock sales in preparation to buy cheap, distressed ship assets at any fire sales while the recession continues, not to pay dividends as you insinuated, as they canceled their dividend to save cash according to their SEC filings, once again to buy cheap fire sale auctioned ships as their competitors with too much debt sink into oblivion.

Which Way Are Shipping Stocks Headed?

I think the bears just got a big piece of DRYS (and me in the process) today (down 28%, from early news of a huge 4th quarter loss of about $7 a share in one quarter, OUCH!

By by dividend. Won't be surprised to see it hit 3.50 or less again, in the very near future. Already got down to $10 today from $14.5.

It's a shame too as the BDI has turned up sharply, and is up to a new 3 month high today and climbing fast, also sad that EXM, PRGN and SB are being draged south by the DRYS bad news and the stock market in general while the BDI was up nearly 5% today alone to a new 3 month high of 945, up 45 points today.

I still think EXM, PRGN and SB (some of the few who have not cancelled their dividends, and PRGN anounced a $20 million dollar stock buy back Nov 20th, 2008. EXM just took delivery of a new Capex ship recently (anounced a few days ago) and signed a deal at nearly 3 times the recent BCI rate for the new ship for a 3 year contract.

I have serious doubts about DRYS now as it may have issues with the drill rig company it bought with the collapse of the oil prices. I fear it has more bad news to come.
I too would like to see a regular blog discussion on these shipping stocks.
I still own EXM, PRGN and SB based on their stability and dividends.