Despite record high January inflation data and ongoing tensions between the U.S. and Russia over Ukraine, the shipping industry’s prospects look bright thanks to soaring demand to address a global supply shortage. Robust import and export activity with the reopening of the economy has generated a level of investor optimism about the shipping space, as evidenced by the SonicShares Global Shipping ETF’s (BOAT) 15.4% returns over the past three months.
While fundamentally sound shipping stocks could be good bets now, we think it could be wise to pick the ones that offer high dividend yields. Because the stock market is expected to remain highly volatile on concerns over the Fed’s aggressive monetary policy tightening, investing in dividend stocks could help hedge one’s portfolio risks to a degree.
Wall Street analysts expect fundamentally strong shipping stocks Star Bulk Carriers Corp. (SBLK), Golden Ocean Group Limited (GOGL), Eagle Bulk Shipping Inc. (EGLE), and Grindrod Shipping Holdings Ltd. (GRIN), to rally by more than 40% in price in the near term. These stocks pay dividends that yield more than 10%.
Star Bulk Carriers Corp. (SBLK)
Athens, Greece-based SBLK, a shipping company, provides ocean transportation for dry bulk cargoes worldwide. SBLK operates a fleet of 128 vessels, with a capacity of 14.1 million dwt.
On Nov. 16, 2021, Petros Pappas, CEO, SBLK, said: “Despite the short-term volatility, our overall outlook for the dry bulk market remains constructive. Strong global growth and increased infrastructure spending have led to a healthy rise in demand for commodities which combined with a historically low order book, create favorable long term dynamics for our industry.”
SBLK’s voyage revenues increased 107.6% year-over-year to $415.69 million for the third quarter, ended Sept. 30, 2021. Its adjusted net income came in at $224.67 million, up 717.5% year-over-year. Also, its adjusted EPS was $2.19, up 655.2% year-over-year.
While the four-year average dividend yield for SBLK is 1.27%, its current dividend translates to an 18.92% yield.
Analysts expect SBLK’s revenue to increase 41.1% to $282.79 million for the quarter ended March 2022. Its EPS is estimated to increase 172.2% to $0.98 for the same period.
Over the past year, the stock has gained 86.1% in price to close yesterday’s trading session at $26.28. Furthermore, Wall Street analysts expect the stock to hit $38.00 in the near term, which indicates a potential 44.6% upside.
Golden Ocean Group Limited (GOGL)
Based in Hamilton, Bermuda, GOGL owns and operates dry bulk vessels comprising Newcastlemax, Capesize, Panamax, and Ultramax ships worldwide. It operates dry bulk vessels in the spot and time charter markets and owns a fleet of 67 dry bulk vessels.
On Nov. 24, 2021, Ulrik Andersen, CEO, said, “Based on our long-term market outlook and the successful execution of our fleet growth and renewal program, which has positioned the company as the industry leader in the large size dry bulk segments, we expect to continue to deliver strong operating performance to the benefit of all stakeholders.”
For the third quarter, ended Sept. 30, 2021, GOGL’s total operating revenues increased 108.9% year-over-year to $387.62 million. The company’s net income came in at $195.33 million, up 400.1% year-over-year. And its EPS came in at $0.97, up 259.3% year-over-year.
GOGL’s dividend has grown at a 52.6% CAGR over the past three years. Its four-year average yield amounts to 5.52%, while its current dividend yields 29.93%.
GOGL’s revenue is expected to increase 71.4% year-over-year to $203.65 million for the period ended March 2022. The company’s EPS is expected to increase 223% to $0.34 for the same period.
Over the past year, the stock has gained 93.6% in price to close yesterday’s trading session at $11.19. Wall Street analysts expect the stock to hit $16.50 in the near term, which indicates a potential 47.5% upside.
Eagle Bulk Shipping Inc. (EGLE)
EGLE in Stamford, Conn., provides the ocean transportation of dry bulk cargoes worldwide. The company owns, charters, operates dry bulk vessels, and serves miners, producers, traders, and end-users. Currently, it operates a fleet of 45 vessels.
On Nov. 4, 2021, Eagle's CEO Gary Vogel said: “Drybulk freight rates continued to strengthen in the third quarter, and Eagle’s strong leverage to the market produced $78 million of net income for the quarter. Not only does this represent the highest quarterly net income Eagle has achieved, it also eclipses the company’s best-ever annual result.”
EGLE’s current dividend translates to a 15.29% yield, while its four-year average yield amounts to 0.3%.
For its fiscal third quarter, ended Sept. 30, 2021, its net revenue increased 169% year-over-year to $183.39 million. Its net income came in at $78.34 million compared to an $11.16 million loss. Also, its EPS came in at $4.92, compared to a $1.09 loss.
EGLE’s revenue is expected to increase 42.3% to $99.55 million for the quarter ended March 2022. The company’s EPS is expected to increase 266.7% to $3.08 for the same period. Over the past year, the stock has gained 83.9% in price to close yesterday’s trading session at $51.48. Wall Street analysts expect the stock to hit $85 in the near term, which indicates a potential 65.1% upside.
Grindrod Shipping Holdings Ltd. (GRIN)
Based in Singapore, GRIN is an international shipping company that owns, charters-in, and operates a fleet of dry bulk carriers and tankers worldwide. It operates a fleet of 23 owned dry bulk carriers and eight long-term chartered-in dry bulk carriers.
For its fiscal third quarter, ended Sept. 30, 2021, GRIN’s cash and bank balances came in at $78.45 million for the period ended Sept.30, 2021, compared to $41.26 million, for the period ended Dec. 31, 2020. In addition, the company’s total assets were $627.04 million, compared to $622.10 million, for the same period. And its total current liabilities came in at $101.80 million, compared to $117.90 million, for the same period.
GRIN’s current dividend translates to a 15.09% yield, and its four-year average yield is 0.24%.
Over the past year, the stock has gained 230.9% to close yesterday’s trading session at $20.22. Wall Street analysts expect the stock to hit $31 in the near term, which indicates a potential 53.3% upside.
SBLK shares rose $0.47 (+1.79%) in premarket trading Tuesday. Year-to-date, SBLK has gained 18.70%, versus a -6.35% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
Wall Street is Bullish on These 4 Shipping Stocks with Yields Over 10% StockNews.com
