My Big, Fat Greek Dividend Paying Shipping Stocks
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While it is debatable if Greece will remain in the European Union, what cannot be denied are the attractive dividend yields of publicly traded companies in its shipping sector. A maritime nation, Greece has a shipping tradition that has bred legendary billionaires such as Aristotle Onassis and many fine companies today that pay double digit dividend yields. In addition to the high dividend income, these stocks offer tremendous returns when the global economy; and, thus, the shipping sector recovers from The Great Recession.
There are six companies in the Greek shipping sector that are profitable with dividend yields more than twice the average of 2% for a member of the Standard & Poor's 500 Index; and price-to-earnings ratio that are superior. That these companies have survived The Great Recession is impressive in itself. The shipping sector was hit very hard. To remain profitable and still be able to pay dividends is testament to the quality of the management at each.
Operating in international commerce, shipping stocks are not hostage to the financial health of the domestic economy, like a bank. As a point of reference, the National Bank of Greece is down almost two-thirds for the last year of market action and has a negative profit margin of 328.07% due to the impact of the European debt crisis. Unsurprisingly, the National Bank of Greece is not a dividend paying stock.
By contrast, Navios Maritime Holdings (NYSE: NM) has a profit margin of 13.16% and pays a dividend yield of 6.54%. Diana Containerships (NASDAQ: DCIX) has a profit margin of 17.33% and pays a yield of 22.26%. Costamare (NYSE: CMRE) has a profit margin of 22.40% and pays a dividend of 8.55%. Capital Product Partners has a profit margin of 49.95% and pays a dividend of 12%. Safe Bulkers (NYSE: SB) has a profit margin of 48.99% and pays a dividend of 9.63%. Navios Maritime Partners LP has a profit margin of 34.18% and pays a dividend of 12.62%.
In addition to each of these Greek shipping stocks having high dividends and high profit margins, each is trading at very attractive valuations. The shipping sector is currently in disfavor for investors. European stocks are also being shunned, at present. That is particularly true of those from Greece.
As an example, Navious Maritime Holdings is trading at a price-to-book ratio of 0.35. That means investors can buy its assets at about just about one-third of the stated book value. Its price-to-sale ratio is 0.57. For those buying the stock of Navious Maritime Holdings, sales are going for a 43% discount as reflected in the share price. It is much the same story for the others.
In addition to the attractive valuations, the appalling debt load carried by other shippers has been avoided for some of these Greek shippers. Diana Containerships has a debt-to-equity ratio of just 0.45, all of it long term debt. By contrast, Frontline Ltd (NYSE: FRO) has a debt-to-equity ratio of 7.15, much of it short term. Not only does that mean that it took Frontline Ltd $7.15 in borrowing to produce every one dollar in shareholder equity, but much of it is coming due soon. For Diana Containerships, the debt is not only much lower, but much less burdensome as it is all long term so current cash flow does not have to go to creditors, as happens with Frontline Ltd and many others.
So far, Navios Maritime Holdings, Diana Containerships, Costamare, Capital Product Partners, Safe Bulkers and Navios Maritime Partners LP are passing the most crucial investment test of all, that of time. Each has survived very adverse conditions for the shipping sector. All are profitable and pay dividends.
Not only does that evince management that knows how to make money in the direst of economic circumstances, it demonstrates a commitment to shareholders. Management is willing enhance the total return of capital outlays for investors with a solid dividend income. It is likely that when the global economy rebounds, there will be substantial dividend growth. This dividend flow combined with the rising share prices will result in a total return that floats above the others in the market.
Fool blogger Jonathan Yates does not own any of the stocks mentioned in this article. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.