Concerning my note yesterday on the companies that have suspended dividends I received the following email:
I’m sure you know, but just in case: FRO has slashed their dividend, along with SFL.
We’d like to know which shipping companies are best equipped to weather the storm, and which ones might move rapidly upwards one a hole forms in the storm clouds.
Thanks for putting your thoughts out there and have a great one Tim!
Good comment and I will respond. First, yesterday’s list was the one I have of shipping companies that have completely suspended their payouts. I know there are some others that have made drastic reductions, but are still paying something. At least for the most recent quarter!
Ship Finance SFL is a stock I how personally and they cut their dividend in half, from 60¢ to 30¢. They also allowed shareholders to elect to take additional shares instead of cash. The data: 55% of shares elected to take additional shares, increasing the float by 2.1 million to 74.8 million. My research shows that SFL has plenty of cash flow to start increasing the dividend again and I hope they do so now that the stock price has started to recover.
Frontline FRO and also Nordic American Tanker NAT fall into a different category. Both of these companies contract their tankers primarily on the spot market and pay quarterly dividends on what the ships have earned for the previous quarter. So, a lower dividend is not a slashing, they just made less money during the quarter. That said, Frontline is sitting on a pile of debt that needs servicing and Nordic American Tanker is debt free. I find NAT to be a more comfortable holding when spot tanker rates are in the “tank” as they currently are. I think NAT will have a lower dividend when they announce next week and I have been considering selling my position and buy back if/when the price falls. However, I am still sitting tight on my shares. They have not given an indication like they usually do on where the dividend will fall, so I am hoping for a positive surprise: Anything over 50¢ a share.
2 Comments
From a T/A perspective, SFL is looking weak both long and short term. I wouldn’t go adding to positions at the moment, in fact the opposite if you are so inclined.
Anyway, it’s not a confirmed sell signal at this point and it could clear itself. I will return to provide an update for SFL entry/exit points when I have a clearer perspective, Monday will be a pivotal day from a short term perspective, and possibly before end of next week on a long term (1 week) perspective.
Regards,
I hope no one sold their SFL based on my previous comment, the signals were extremely weak at the time but now are growing stronger. The technical support proved 3/20 was reinforced by today’s market action (5/1), so the likelihood of further gains has increased substantially. If the SFL maintains pricing support past a few days this week, there should be a substantial rally.