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.

I have been a little slow on putting up my thoughts on the Q4 and year-end results for Teekay Corp TK. I wanted to listen to the conference call first. Teekay is a diversified tanker company as well as the parent company of 3 focused tanker operations: Teekay LNG Partners TGP, Teekay Tankers [[TNK]] and Teekay Offshore Partners TOO.

For 2008 Teekay had net income of almost $4.00 per share excluding non-cash negative items. The $1.26 annual dividend is well covered. The company has been hard at work reducing exposure to the stumbling spot tanker market and increasing liquidity.

With the cash flow from the daughter companies plus locked in contracts, Teekay is in a strong financial position. They should be able to continue to pay the reasonable dividend and grow the fleet with new ship acquisitions. The daughter companies show higher yields and TGP and TOO have had better price appreciation Y-T-D.  The parent company may be the sleeper of the Teekay family of companies.

To stretch this out and give me something to write about for a few days I am going the write about these stocks in groups of 5. I will start with the lowest dividend returns for the half and work up the the largest cash payout.

Here are the bottom 5 payors on my list. The stocks are listed in this order: Company and stock symbol, dividend earned on $1000 invested on 1/1/2009 (divide by 5 to get an annualized percentage) and the share price change since the beginning of the year.

• Frontline Ltd.FRO, $17.00, -18.8%
• Knightsbridge Tankers Ltd., $19.04, +7.5%
• Paragon Shipping, Inc. PRGN, $21.00, +16.0%
• Overseas Shipholding Group, $21.00, -16.7%
• Teekay Corp.TK, $32.26, -13.3%

Tanker companies are the bulk of this group with only Paragon as a bulk shipper. FRO and VLCCF typically payout a high percentage of the free cash flow they earn in the tanker spot market. That market has been very depressed for the last 5 months or so. Knightsbridge paid only a single dividend during the 1st half of 2009 and elected not to make a payout after 1st quarter earnings were very low. OSG and TK have more stable revenues and payout a conservative portion of earnings.

Paragon Shipping was paying 50¢ per share until the dry bulk market and values collapsed. Instead of suspending the dividend like many others in the sector, Paragon’s management elected to keep paying a dividend a 5¢ per share.

Remenber whe looking at dividends from shipping companies that the different companies in the sector can have significantly different payout policies. Some have payouts that vary significantly from quarter to quarter and others strive for a more stable payout policy. Make sure you know what you are getting before investing in one of these companies.

Steady dividend at 9% yield looks pretty good in todays market. Press release linked above.