10 Best Shipping Stocks That Pay Dividends
In this article, we will take a look at the 10 best shipping stocks that pay dividends. To skip our analysis of the recent market trends and activity, you can go directly to see the 5 Best Shipping Stocks That Pay Dividends.
The global shipping industry provides maritime passenger or freight services and is one of the most important modes of transportation in international logistics. Over 90% of world trade is carried by the international shipping industry, and companies involved in the sector are responsible for the transportation of raw materials, commodities, and finished goods across the oceans through various vessels. While the global shipping supply chain has suffered through a crisis since the onset of the global COVID-19 pandemic in early 2020, the global economy now faces the exact opposite problem: too many containers. Although liner companies have desperately tried to cut services and blanked sailings, it has not been enough to prevent spot freight rates from returning to ‘normal’ levels. Faced with uncertainty, ship owners have delayed some new building orders, and the average age of the world container ship fleet has risen from 10.3 to 13.7 years. After over two years of rising rates and overstretched capacity, the rapidly cooling shipping market seems to be set for an uncertain 2023.
According to a DHL Global Forwarding report, shipping container lines racked up profits of $40 billion from Q2 2020 to Q2 2022, and there has been significant progress in the clearing of port congestions which has led to a significant reduction in spot container freight rates. According to the S&P Global Market Intelligence, the Baltic Dry Index (BDI) is expected to fall about 20% to 30% to average about 1,300-1,400 points in 2023 before recovering to average about 1,400-1,500 points in 2024. However, changes in mainland China's 'zero-COVID' policy or ceasefire agreements in the Russia-Ukraine war would continue to pose major upside catalyst, while a faster-declining container market with global recession remains as a major downside risk in the medium and long-term. Overall, dry bulk freight rates are expected to return to the pre-pandemic level in the coming months. Additionally, a limited supply growth driven by regulation and lack of new building order will help the market in its recovery during the second half of 2023 and 2024.
Shipping stocks have a history of paying a significant portion of their income to shareholders in the form of dividends. In times of good profitability for shipping and container companies, they have some of the highest dividend yields. To this end, we have compiled a list of 10 shipping stocks that investors can take advantage of, including stocks like Global Ship Lease, Inc. (NYSE:GSL), Scorpio Tankers Inc. (NYSE:STNG), and Genco Shipping & Trading Limited (NYSE:GNK), among others listed below.
Photo by ammiel jr on Unsplash
Our Methodology
We chose the 10 best stocks that exhibited a mix of industry leadership, strong fundamentals, growth potential, analyst sentiment, and dividend yields. The stocks in this list are involved in the shipping industry, and are sorted based on the number of hedge funds invested in them at the end of Q3 2022.
Best Shipping Stocks That Pay Dividends
10. Diana Shipping Inc. (NYSE:DSX)
Number Of Hedge Fund Holders: 11
Dividend Yield as of December 14: 23.81%
Diana Shipping Inc. (NYSE:DSX) is a global provider of shipping transportation services that specializes in the ownership of dry bulk vessels. Based in Athens, Greece, Diana Shipping Inc.'s fleet currently consists of 40 dry bulk vessels.
The Board of Directors of Diana Shipping Inc. (NYSE:DSX) declared a quarterly cash dividend of $0.18 per share on November 17. Its shares have a dividend yield of 23.81% as of December 14.
On October 3, Diana Shipping Inc. (NYSE:DSX) announced that on September 30, 2022, it signed a term loan facility with Nordea Bank Abp, through nine wholly-owned subsidiaries, in the amount of up to $200 million. The purpose of the senior secured term loan facility is the partial financing of the nine modern Ultramax dry bulk vessels, of which Diana Shipping Inc. expects to take delivery during the fourth quarter of 2022.
As of Q3 2022, 11 of the 920 hedge funds tracked by Insider Monkey held shares of Diana Shipping Inc. (NYSE:DSX), worth $25 million. Jeremy Hosking’s Hosking Partners was the company's largest shareholder for the quarter.
Much like Global Ship Lease, Inc. (NYSE:GSL), Scorpio Tankers Inc. (NYSE:STNG), and Genco Shipping & Trading Limited (NYSE:GNK), Diana Shipping Inc. (NYSE:DSX) is an excellent shipping stock that pays dividends to shareholders.
9. Danaos Corporation (NYSE:DAC)
Number Of Hedge Fund Holders: 15
Dividend Yield as of December 14: 5.48%
Danaos Corporation (NYSE:DAC) is one of the largest independent owners of modern, large-size containerships. Its fleet includes 71 modern, high-quality Container Vessels. On November 7, Danaos Corporation (NYSE:DAC) declared a quarterly dividend of $0.75, which was paid to shareholders on November 30.
On November 9, Citi analyst Christian Wetherbee lowered the price target on Danaos Corporation (NYSE:DAC) to $65 from $85 and kept a Neutral rating on the shares post the Q3 results. The analyst's multiple moves lower to account for deteriorating fundamentals from peak levels in the container market.
Danaos Corporation (NYSE:DAC) shares were held by 15 of the 920 hedge funds as of Q3 2022, with the total hedge fund holdings valued at $127.6 million. Its largest hedge fund shareholder is Ken Griffin’s Citadel Investment Group.
8. ZIM Integrated Shipping Services Ltd. (NYSE:ZIM)
Number Of Hedge Fund Holders: 15
Dividend Yield as of December 14: 152.38%
Zim Integrated Shipping Services Ltd. (NYSE:ZIM), commonly known as ZIM, is a publicly held Israeli international cargo shipping company, and one of the top 20 global carriers.
Earlier this November, ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) declared a cash dividend of $2.95 per share for the quarter. Its shares had a dividend yield of 152.38%, as of December 14.
On November 18 Barclays analyst Alexia Dogani lowered her price target on ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) to $26.50 from $63 and kept an Equal Weight rating on the shares. According to the analyst, the speed with which the container market is correcting weighs on the outlook for ZIM's earnings into fiscal 2023 and beyond. She adds, however, that the company's Q3 report was solid.
At the close of the third quarter of 2022, 15 of the 920 hedge funds tracked by Insider Monkey reported holding shares valued at $258.2 million in ZIM Integrated Shipping Services Ltd. (NYSE:ZIM). Arrowstreet Capital is one of the company's biggest shareholders with ownership of 3.88 million shares valued at $91.23 million.
7. Eagle Bulk Shipping Inc. (NASDAQ:EGLE)
Number Of Hedge Fund Holders: 16
Dividend Yield as of December 14: 14.20%
Eagle Bulk Shipping Inc. (NASDAQ:EGLE) is an American integrated shipowner operator that is engaged in the global transportation of dry bulk commodities. The company's typical cargo includes both major bulk cargoes (coal, grain, and iron ore) and minor bulk (fertilizer, steel products, petcoke, cement). Eagle Bulk Shipping Inc. (NASDAQ:EGLE) company currently pays a quarterly dividend of $1.80 per share and has a dividend yield of 14.20%, as of December 14.
Earlier this September, Stifel analyst Benjamin Nolan initiated coverage of Eagle Bulk Shipping Inc. (NASDAQ:EGLE) with a Buy rating and a $62 price target. According to the analyst, dry bulk shipping markets have enjoyed a strong recovery, and "there is more runway." Nolan states that rates have fallen in recent months, but the orderbook is at multi-decade lows, and demand tailwinds in iron ore, coal, and Ukrainian grain should drive higher shipping rates and earnings power for Eagle.
At the end of Q3 2022, 16 hedge funds in Insider Monkey’s database owned stakes in Eagle Bulk Shipping Inc. (NASDAQ:EGLE), compared with 18 a quarter earlier. These stakes are collectively valued at $216.1 million. Oaktree Capital Management was the company’s leading stakeholder in Q3.
6 Genco Shipping & Trading Limited (NYSE:GNK)
Number Of Hedge Fund Holders: 16
Dividend Yield as of December 14: 13.48%
One of the largest U.S.-headquartered drybulk shipping companies, Genco Shipping & Trading Limited (NYSE:GNK) provides a full-service logistics solution for the transportation of commodities worldwide using a diversified fleet of modern, fuel-efficient vessels through an in-house commercial operating platform.
Earlier this September, Stifel analyst Benjamin Nolan initiated coverage of Genco Shipping & Trading Limited (NYSE:GNK) with a Buy rating and $20 price target. According to the analyst, dry bulk shipping rates have fallen off in recent months, but he expects stronger seasonal demand and believes China will recover post-lockdown.
Genco Shipping & Trading Limited (NYSE:GNK) began paying dividends in 2019 and has paid regular dividends to shareholders since then. It currently offers a quarterly dividend of $0.78 per share for a yield of 13.48%, as recorded on December 14. The company has raised its dividends twice this year, which qualifies it as one of the best dividend stocks on our list.
As per Insider Monkey’s Q3 2022 database, 16 hedge funds owned stakes in Genco Shipping & Trading Limited (NYSE:GNK), the same as in the previous quarter. The collective value of these stakes is over $72.3 million. With over 2.6 million shares, Centerbridge Partners was the company’s leading stakeholder.
Similar to Global Ship Lease, Inc. (NYSE:GSL), Scorpio Tankers Inc. (NYSE:STNG), and SFL Corporation Ltd. (NYSE:SFL), Genco Shipping & Trading Limited (NYSE:GNK) is a noteworthy shipping stock.
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Disclosure. None. 10 Best Shipping Stocks That Pay Dividends is originally published on Insider Monkey.
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