The global shipping industry keeps the wheels turning for a healthy economy, ensuring that goods reach their intended recipients. But lately, amid the ongoing geopolitical tensions, unrest in the Red Sea region amid Houthi attacks on ships have resulted in major shipping diversions. Consequently, the routes are longer, demand is through the roof, and capacity is tight.
Plus, according to Transport Intelligence’s (Ti) latest Ocean Freight Confidence Index, ocean freight rates hit their highest point in 16 months in February. The fluctuating freight rates are drawing investors’ attention to shipping stocks.
Against this backdrop, shipping stocks Seanergy Maritime Holdings Corp. (SHIP) and Safe Bulkers, Inc. (SB), which are trading at attractive valuations, hold immense upside potential. Moreover, as both companies deliver value to shareholders through dividend payments, they are appealing options for investors seeking steady passive income.
Shipping Dividend Stock #1: Seanergy Maritime Holdings
Athens-based shipping company Seanergy Maritime Holdings Corp. (SHIP), with a market cap of $184.8 million, provides seaborne transportation of dry bulk commodities worldwide. The company’s operating fleet consists of 17 vessels with an average age of roughly 13 years and an aggregate cargo-carrying capacity of about 3,054,820 deadweight tons (dwt).
Shares of Seanergy Maritime rose 98.5% over the past 52 weeks, surpassing the broader Nasdaq Composite’s ($NASX) 34.3% gains over the same time frame.
Earlier this month, the company paid a dividend of $0.025 per share to shareholders, along with a special dividend of $0.075. The company offers an annualized dividend of $0.10, resulting in a 1.06% dividend yield. Seanergy Maritime maintains a healthy dividend payout ratio of 32.2%, allowing ample room for growth initiatives and potential dividend increases in the future. Moreover, in 2023, it completed $2.5 million in share repurchases.
Seanergy Maritime's stock trades at 8.84 times forward earnings, which is below its own five-year average of 11.64x and the marine transportation industry median.
On March 15, the company reported Q4 revenue of $39.4 million, up 38.2% year over year, which beat Wall Street estimates by 10%. Its adjusted net income declined to $11.4 million, or $0.58 per share, but beat Wall Street estimates by roughly 292%.
The company's fleet recorded a daily time charter equivalent (TCE) rate of $24,920 for the quarter, which generated an adjusted EBITDA of $23.9 million. Seanergy Maritime acquired a 2013-built Japanese Capesize vessel with estimated delivery in Q2 of 2024.
Analysts tracking Seanergy Maritime expect its fiscal 2024 EPS to reach $1.07, up a whopping 791.7% year over year, and increase further by 43% in fiscal 2025 to $1.53.
Seanergy Maritime stock has a unanimous "Strong Buy" rating from all four analysts covering it.
SHIP has an average analyst price target of $13, which indicates a 35.8% upside potential from the current price level, while the Street-high price target of $14 suggests a 46.3% upside potential.
Shipping Dividend Stock #2: Safe Bulkers
Monaco-based Safe Bulkers, Inc. (SB) provides marine dry bulk transportation services. It owns and operates dry bulk vessels for transporting bulk cargoes, primarily coal, grain, and iron ore. As of Feb. 9, the company had a fleet of 48 vessels with an aggregate carrying capacity of 4.8 million dwt and an average age of 9.9 years. Its market cap currently stands at $562.5 million.
Shares of Safe Bulkers have gained 40.5% over the past 52 weeks, outperforming the broader S&P 500 Index's ($SPX) 25.7% returns and the Russell 2000 Index's (RUT) 15.7% gains.
On March 19, the company paid a dividend of $0.05 per share to its shareholders. The company offers an annualized dividend of $0.20 per share, resulting in a dividend yield of 3.97%.
Safe Bulkers stock trades at 5.77 times forward earnings, which is lower than the industry average and its own five-year average of 7.46x.
On Feb. 12, Safe Bulkers reported fiscal Q4 adjusted net income of $29.5 million, or $0.25 per share, which surpassed Wall Street estimates by 66.7%. Its revenue of $85.5 million exceeded the Street's forecast by 12.8%. The company earned an average TCE of $18,321 daily.
Analysts tracking Safe Bulkers expect its fiscal 2024 EPS to reach $0.87, up 58.2% year over year from $0.55 in fiscal 2023, and increase further by 16.1% in fiscal 2025 to $1.05. The company is expected to announce fiscal Q1 2024 earnings results on April 29.
The stock has a unanimous "Strong Buy" rating from both of the analysts covering it, compared to a “Hold” rating three months ago and a “Moderate Buy” rating two months ago.
Safe Bulkers stock has an average analyst price target of $5.30, which indicates a modest 4.7% upside potential from the current price level, while the Street-high price target of $6 suggests an 18.6% upside potential.
On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
