In this article, we will take a look at the 10 best shipping stocks that pay dividends.
The global shipping industry provides maritime passenger or freight services and is one of the most important modes of transportation in international logistics. Over 90% of world trade is carried by the international shipping industry, and companies involved in the sector are responsible for the transportation of raw materials, commodities, and finished goods across the oceans through various vessels. While the global shipping supply chain has suffered through a crisis since the onset of the global COVID-19 pandemic in early 2020, the global economy now faces the exact opposite problem: too many containers. Although liner companies have desperately tried to cut services and blanked sailings, it has not been enough to prevent spot freight rates from returning to ‘normal’ levels. Faced with uncertainty, ship owners have delayed some new building orders, and the average age of the world container ship fleet has risen from 10.3 to 13.7 years. After over two years of rising rates and overstretched capacity, the rapidly cooling shipping market seems to be set for an uncertain 2023.
According to a DHL Global Forwarding report, shipping container lines racked up profits of $40 billion from Q2 2020 to Q2 2022, and there has been significant progress in the clearing of port congestions which has led to a significant reduction in spot container freight rates. According to the S&P Global Market Intelligence, the Baltic Dry Index (BDI) is expected to fall about 20% to 30% to average about 1,300-1,400 points in 2023 before recovering to average about 1,400-1,500 points in 2024. However, changes in mainland China’s ‘zero-COVID’ policy or ceasefire agreements in the Russia-Ukraine war would continue to pose major upside catalyst, while a faster-declining container market with global recession remains as a major downside risk in the medium and long-term. Overall, dry bulk freight rates are expected to return to the pre-pandemic level in the coming months. Additionally, a limited supply growth driven by regulation and lack of new building order will help the market in its recovery during the second half of 2023 and 2024.
Shipping stocks have a history of paying a significant portion of their income to shareholders in the form of dividends. In times of good profitability for shipping and container companies, they have some of the highest dividend yields. To this end, we have compiled a list of 10 shipping stocks that investors can take advantage of, including stocks like Global Ship Lease, Inc. (NYSE:GSL), Scorpio Tankers Inc. (NYSE:STNG), and Genco Shipping & Trading Limited (NYSE:GNK), among others listed below.
Our Methodology
We chose the 10 best stocks that exhibited a mix of industry leadership, strong fundamentals, growth potential, analyst sentiment, and dividend yields. The stocks in this list are involved in the shipping industry, and are sorted based on the number of hedge funds invested in them at the end of Q3 2022.
Best Shipping Stocks That Pay Dividends
10. Diana Shipping Inc. (NYSE:DSX)
Number Of Hedge Fund Holders: 11
Dividend Yield as of December 14: 23.81%
Diana Shipping Inc. (NYSE:DSX) is a global provider of shipping transportation services that specializes in the ownership of dry bulk vessels. Based in Athens, Greece, Diana Shipping Inc.’s fleet currently consists of 40 dry bulk vessels.
The Board of Directors of Diana Shipping Inc. declared a quarterly cash dividend of $0.18 per share on November 17. Its shares have a dividend yield of 23.81% as of December 14.
On October 3, Diana Shipping Inc. announced that on September 30, 2022, it signed a term loan facility with Nordea Bank Abp, through nine wholly-owned subsidiaries, in the amount of up to $200 million. The purpose of the senior secured term loan facility is the partial financing of the nine modern Ultramax dry bulk vessels, of which Diana Shipping Inc. expects to take delivery during the fourth quarter of 2022.
As of Q3 2022, 11 of the 920 hedge funds tracked by Insider Monkey held shares of Diana Shipping Inc., worth $25 million. Jeremy Hosking’s Hosking Partners was the company’s largest shareholder for the quarter.
Much like Global Ship Lease, Inc., Scorpio Tankers Inc., and Genco Shipping & Trading Limited, Diana Shipping Inc. is an excellent shipping stock that pays dividends to shareholders.
9. Danaos Corporation (NYSE:DAC)
Number Of Hedge Fund Holders: 15
Dividend Yield as of December 14: 5.48%
Danaos Corporation (NYSE:DAC) is one of the largest independent owners of modern, large-size containerships. Its fleet includes 71 modern, high-quality Container Vessels. On November 7, Danaos Corporation declared a quarterly dividend of $0.75, which was paid to shareholders on November 30.
On November 9, Citi analyst Christian Wetherbee lowered the price target on Danaos Corporation to $65 from $85 and kept a Neutral rating on the shares post the Q3 results. The analyst’s multiple moves lower to account for deteriorating fundamentals from peak levels in the container market.
Danaos Corporation shares were held by 15 of the 920 hedge funds as of Q3 2022, with the total hedge fund holdings valued at $127.6 million. Its largest hedge fund shareholder is Ken Griffin’s Citadel Investment Group.
8. ZIM Integrated Shipping Services Ltd. (NYSE:ZIM)
Number Of Hedge Fund Holders: 15
Dividend Yield as of December 14: 152.38%
Zim Integrated Shipping Services Ltd. (NYSE:ZIM), commonly known as ZIM, is a publicly held Israeli international cargo shipping company, and one of the top 20 global carriers.
Earlier this November, ZIM Integrated Shipping Services Ltd. declared a cash dividend of $2.95 per share for the quarter. Its shares had a dividend yield of 152.38%, as of December 14.
On November 18 Barclays analyst Alexia Dogani lowered her price target on ZIM Integrated Shipping Services Ltd. to $26.50 from $63 and kept an Equal Weight rating on the shares. According to the analyst, the speed with which the container market is correcting weighs on the outlook for ZIM’s earnings into fiscal 2023 and beyond. She adds, however, that the company’s Q3 report was solid.
At the close of the third quarter of 2022, 15 of the 920 hedge funds tracked by Insider Monkey reported holding shares valued at $258.2 million in ZIM Integrated Shipping Services Ltd.. Arrowstreet Capital is one of the company’s biggest shareholders with ownership of 3.88 million shares valued at $91.23 million.
7. Eagle Bulk Shipping Inc. (NASDAQ:EGLE)
Number Of Hedge Fund Holders: 16
Dividend Yield as of December 14: 14.20%
Eagle Bulk Shipping Inc. (NASDAQ:EGLE) is an American integrated shipowner operator that is engaged in the global transportation of dry bulk commodities. The company’s typical cargo includes both major bulk cargoes (coal, grain, and iron ore) and minor bulk (fertilizer, steel products, petcoke, cement). Eagle Bulk Shipping Inc. company currently pays a quarterly dividend of $1.80 per share and has a dividend yield of 14.20%, as of December 14.
Earlier this September, Stifel analyst Benjamin Nolan initiated coverage of Eagle Bulk Shipping Inc. with a Buy rating and a $62 price target. According to the analyst, dry bulk shipping markets have enjoyed a strong recovery, and “there is more runway.” Nolan states that rates have fallen in recent months, but the orderbook is at multi-decade lows, and demand tailwinds in iron ore, coal, and Ukrainian grain should drive higher shipping rates and earnings power for Eagle.
At the end of Q3 2022, 16 hedge funds in Insider Monkey’s database owned stakes in Eagle Bulk Shipping Inc., compared with 18 a quarter earlier. These stakes are collectively valued at $216.1 million. Oaktree Capital Management was the company’s leading stakeholder in Q3.
6 Genco Shipping & Trading Limited (NYSE:GNK)
Number Of Hedge Fund Holders: 16
Dividend Yield as of December 14: 13.48%
One of the largest U.S.-headquartered drybulk shipping companies, Genco Shipping & Trading Limited provides a full-service logistics solution for the transportation of commodities worldwide using a diversified fleet of modern, fuel-efficient vessels through an in-house commercial operating platform.
Earlier this September, Stifel analyst Benjamin Nolan initiated coverage of Genco Shipping & Trading Limited with a Buy rating and $20 price target. According to the analyst, dry bulk shipping rates have fallen off in recent months, but he expects stronger seasonal demand and believes China will recover post-lockdown.
Genco Shipping & Trading Limited began paying dividends in 2019 and has paid regular dividends to shareholders since then. It currently offers a quarterly dividend of $0.78 per share for a yield of 13.48%, as recorded on December 14. The company has raised its dividends twice this year, which qualifies it as one of the best dividend stocks on our list.
As per Insider Monkey’s Q3 2022 database, 16 hedge funds owned stakes in Genco Shipping & Trading Limited, the same as in the previous quarter. The collective value of these stakes is over $72.3 million. With over 2.6 million shares, Centerbridge Partners was the company’s leading stakeholder.
Similar to Global Ship Lease, Inc., Scorpio Tankers Inc., and SFL Corporation Ltd. (NYSE:SFL), Genco Shipping & Trading Limited is a noteworthy shipping stock.
5. Star Bulk Carriers Corp. (NASDAQ:SBLK)
Number Of Hedge Fund Holders: 16
Dividend Yield as of December 14: 31.60%
Star Bulk Carriers Corp. (NASDAQ:SBLK) is a shipping company that owns and operates a fleet of dry bulk career vessels. A Greece-based global shipping company, its vessels transport major bulks, which include iron ore, coal, and grain, and minor bulks, which include bauxite, fertilizers, and steel products.
On October 27, Deutsche Bank analyst Amit Mehrotra lowered the price target on Star Bulk Carriers Corp. to $33 from $40 and maintained a Buy rating on the shares ahead of the company’s Q3 results.
At the end of Q3 2022, 16 hedge funds in Insider Monkey’s database owned stakes in Star Bulk Carriers Corp., compared with 18 in the previous quarter. The collective value of these stakes is over $516.4 million. With over 26 million shares, Oaktree Capital Management was the company’s leading stakeholder.
4. Golden Ocean Group Limited (NASDAQ:GOGL)
Number Of Hedge Fund Holders: 18
Dividend Yield as of December 14: 25.88%
Owning one of the largest dry bulk fleets in the world, Golden Ocean Group Limited (NASDAQ:GOGL) is a Bermuda-registered, Norway-based dry bulk shipping company that was created as a demerged part of Frontline in 2004 and is listed on Nasdaq and the Oslo Stock Exchange.
On October 4, Golden Ocean Group Limited announced a share repurchase program of up to $100 million of the company’s common stock for a period of up to 12 months. As of September 26, Jefferies analyst Omar Nokta has a Hold rating and a $10 price target on Golden Ocean Group Limited.
Golden Ocean Group Limited declared a quarterly cash dividend of $0.35 per share for Q3 2022. Its shares have a dividend yield of 25.88% as of December 14.
At the close of Q3 2022, 18 hedge funds were long Golden Ocean Group Limited and held stakes worth $47 million in the company. Of those, Renaissance Technologies was the most prominent shareholder and held stakes worth $30.8 million in the company.
3. SFL Corporation Ltd. (NYSE:SFL)
Number Of Hedge Fund Holders: 18
Dividend Yield as of December 14: 9.90%
SFL Corporation Ltd. is a leading maritime company that is involved in the ownership and operation of vessels for the transportation of crude oil and natural gas.
On August 24, DNB Markets analyst Joergen Lian upgraded SFL Corporation Ltd. to Buy from Hold with a $13.50 price target. According to Liam, Q2 was another strong quarter with the fourth consecutive dividend increase. The analyst sees “considerable long-term support” for the dividend without considering any potential benefit from the strengthening offshore markets
SFL Corporation Ltd. has regularly paid dividends since its initial listing on the NYSE in 2004. Earlier this November, the company declared its latest quarterly dividend of $0.23 per share. As of December 14, the shipping stock had a dividend yield of 9.90%.
At the end of Q3 2022, 18 hedge funds disclosed ownership of stakes in SFL Corporation Ltd.. These funds held collective stakes of $64.15 million in the company. This is compared to 13 positions in the previous quarter with stakes worth $75.16 million.
2. Global Ship Lease, Inc. (NYSE:GSL)
Number Of Hedge Fund Holders: 19
Dividend Yield as of December 14: 8.68%
Global Ship Lease, Inc., founded in 2007 and based in London, is a leading independent owner of containerships with a diversified fleet of mid-sized and smaller containerships. Global Ship Lease, Inc.’s dividend yield on December 14 stood at 8.68%,
On November 9, Global Ship Lease, Inc. declared a quarterly dividend of $0.375 per share. The dividend was paid on December 12, to shareholders of record on November 22.
On August 30, Global Ship Lease, Inc. announced that it has entered into new multi-year charters with Hapag-Lloyd for six ECO 6,900 TEU ships. These charters are expected to generate average Adjusted EBITDA of approximately $13.1 million per ship, per year; and total Adjusted EBITDA of around $393 million for the six ships over the firm charter period.
According to Insider Monkey’s Q3 data, 19 hedge funds were long Global Ship Lease, Inc., with collective stakes worth about $115.6 million, compared to 20 funds in the last quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP is the leading shareholder of the company, with 1.57 shares worth over $24.78 million.
1. Scorpio Tankers Inc. (NYSE:STNG)
Number Of Hedge Fund Holders: 30
Dividend Yield as of December 14: 0.70%
Scorpio Tankers Inc. is a tanker shipping company that operates as an international provider in the transportation of refined petroleum products. The company owns and operates fuel tanker vessels with a portfolio of 131 tankers under its ownership.
Earlier on October 31, Scorpio Tankers Inc. declared a quarterly dividend of $0.10, which will be payable on December 15, to shareholders of record on November 17.
On December 9, BTIG analyst Gregory Lewis raised the price target on Scorpio Tankers Inc. to $70 from $60 and kept a Buy rating on the shares. The analyst states that his investor meetings with the company management were constructive with product tanker utilization over 90% and a limited order book, which points to a multi-year rate upcycle.
According to Insider Monkey’s data, 30 hedge funds were bullish on Scorpio Tankers Inc. at the end of September 2022, compared to 26 funds in the last quarter. John Overdeck and David Siegel’s Two Sigma Advisors is a prominent stakeholder of the company, with 961,021 shares worth $40.4 million.
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This article is originally published at Insider Monkey.
