Star Bulk Carriers has been hard on dividend investors over the last year. After starting up operations in late 2007, Star Bulk paid a 35¢ per share dividend in the 1st two quarters of 2008. In the 3rd quarter the 36¢ dividend was half cash and half stock. By the 4th quarter they had suspended the dividend. Now for the 2nd quarter of 2009 the company has restarted distributions with a 5¢ payout.

Teekay Corporation TK has increased their dividend for each of the last 5 years. The amount of increase were 16% and 15% at the end of 2007 and 2008. Five years ago the company was paying 12.5¢ per quarter, now it is almost 32¢. Long term investors rejoice!

Teekay LNG Partners LP TGP has been steadily increasing the distribution since forming in 2005. The vessels are on 10 to 25 year contracts and cash flow is more than sufficient to cover the payout.

Teekay Offshore TOO has been in business for 2.5 years and looks like another well-managed Teekay operation. Distributions have increased from 35¢ to 45¢ over the last 2 years. Unique niche of offshore drilling shuttle tanker should provide diversity from the regular tanker market.

Teekay Tankers Ltd. TNK has a flexible dividend policy based on the revenue of the fleet which is exposed to the fixed charter and spot tanker markets. Current spot tanker rates indicate the previous level of distributions will not be matched for a while. Do not look at the yield on this one! Make a decision on where you think tanker rates are going and what the company reports for the 2nd quarter.

I am about Teekay’d out, but there are some interesting options listed above. Only two dividend stocks left to review.

Star Bulk Carriers SBLK has declared a dividend of 5¢ per share to be paid to shareholders of record 7 July 2009. In the press release the company stated that they must receive approval from their lenders to continue dividend payments in the 3rd and 4th quarters of 2008.

Star Bulk now gets to move from my suspended dividend list to the dividend paying list. This will definitely affect Y-T-D returns of the suspended list. SBLK is/was the best performing stock on the list, up 42% so far this year. Even with Star Bulk’s positive performance the total list (equal dollar weighted) is down 15.6% so far in 2009.

Linked above is the first quarter earnings report for Star Bulk Carriers SBLK. Star Bulk owns a dozen dry bulk vessels, 4 Capesize and the rest are Supramax. All of the ships are on time charter contracts until at least February 2010.

Overall, Star Bulk had a pretty nice quarter. Their vessels have maintained a steady TCE from last year and they generate on average $9,000 per day, per vessel in excess of their break even costs. The bottom line numbers are not as great as the first glance would indicate though, due to over $17 million in non-cash items pumping up the EBIDTA and net income. For these shipping companies the non-cash items and depreciation can have significant effect on net income, so it is always good to look at the cash flow.

According to the press release, SBLK had net cash provided by operating activities of $24.6 million. During the quarter $20 million of cash was classified as restricted to keep the bankers happy. $12 million was paid to reduce principal of long term debt. It appears the $12 million per quarter is the required loan pay down for the rest of 2009 and it jumps to about $15 million per quarter in 2010.

Cash flow is sufficient to cover expenses and pay down the debt and hopefully the company will at some point be able to resume the payment of a dividend.

SBLK has been the best performing stock Y-T-D in the universe of shipping stocks I follow. The shares have gained 106% from where they started the year and are 330% above the 52 week low. Based on the numbers I outlined above, the stock is still trading at about 3 times free cash flow and about 2 times cash revenues with good forward visibility on those revenues. I think the stock still has room to run.

• My shipping stock universe, 42 stocks, +4.90%
• Tanker stocks, 18 stocks, -0.60%
• Dry bulk, 11 stocks, +16.63%
• Container and mixed fleet, 8 stocks, -7.01%
• Other shipping (barge & river), 3 stocks, +19.96%

I also have categories for shipping stocks that are paying a continuing dividend and those that have suspended their distributions:

• Dividend paying stocks, 24 stocks, +7.89% plus 6.19% in cash distributions
• Suspended dividends, 11 stocks, +3.31%

Note: SHIP added to suspended div list, missed this earlier in year.

When we reach the half way point of 2009 I will do some more in-depth analysis of the sectors, I just wanted to throw out the numbers today. As a final note here are the best and worst performing stocks Y-T-D from my list: SBLK: +95%, dry bulk, OCNF, -41%, mixed fleet.

The market is now open, I hope you have a profitable day.

OCNF, DRYS, DSX, GNK, EGLE, SBLK, EXM, GLNG, DAC.