Ship Finance International SFL has declared a second consecutive 30¢ dividend where shareholders can elect to receive cash or additional shares of stock. I am not a big fan of the dilution from issuing stock, but at current share prices and assuming the same level of participation this quarter the amount is about 1.5% of market cap. I anti-diluted myself by spending my cash dividend in advance and picking up a few shares today.
For this quarter’s presentation slide show, SFL breaks out free cash flow. This is after expenses, interest and loan amortization. The net free cash flow for the first quarter was 73¢ per share, nicely covering the dividend. A comparable number was not made available for the Q4 presentation, but comparing EBIDTA for the 2 quarters, the first quarter of 2009 was a 20¢ per share improvement over Q4, 2008.
Also noted in the press release is that SFL delayed the purchase of 5 newbuild container ships for up to 18 months, pushing the delivery dates into 2011 and 2012.
I like Ship Finance as a long term, conservative exposure to shipping. Right now you can collect a 12% dividend while waiting for Board of Directors to start ratcheting up the payout again. One negative may be the amount of profit share received from Frontline over the next several quarters. Profit share has been at about 20¢ per share for the past 2 quarters, compared to a historical average of 30¢. The current very low VLCC spot rates may further reduce or stop the profit share until tanker spot rates improve.
Ship Finance: 30 cent dividend, cash or stock
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Ship Finance International SFL has declared a second consecutive 30¢ dividend where shareholders can elect to receive cash or additional shares of stock. I am not a big fan of the dilution from issuing stock, but at current share prices and assuming the same level of participation this quarter the amount is about 1.5% of market cap. I anti-diluted myself by spending my cash dividend in advance and picking up a few shares today.
For this quarter’s presentation slide show, SFL breaks out free cash flow. This is after expenses, interest and loan amortization. The net free cash flow for the first quarter was 73¢ per share, nicely covering the dividend. A comparable number was not made available for the Q4 presentation, but comparing EBIDTA for the 2 quarters, the first quarter of 2009 was a 20¢ per share improvement over Q4, 2008.
Also noted in the press release is that SFL delayed the purchase of 5 newbuild container ships for up to 18 months, pushing the delivery dates into 2011 and 2012.
I like Ship Finance as a long term, conservative exposure to shipping. Right now you can collect a 12% dividend while waiting for Board of Directors to start ratcheting up the payout again. One negative may be the amount of profit share received from Frontline over the next several quarters. Profit share has been at about 20¢ per share for the past 2 quarters, compared to a historical average of 30¢. The current very low VLCC spot rates may further reduce or stop the profit share until tanker spot rates improve.