X
<

Will Navios Partners’ 3Q15 Distribution Cut Spur Future Growth?

PART:
1 2 3 4 5 6 7
Part 5
Will Navios Partners’ 3Q15 Distribution Cut Spur Future Growth? PART 5 OF 7

Navios to Maintain Strong Yield despite Distribution Cut

Dividend yield

As Navios Maritime Partners (NMM) is an MLP, we’ll compare its dividend yield to the S&P MLP Index and the Alerian MLP Index (AMZ). The S&P MLP Index represents a broad MLP universe, providing exposure to leading partnerships that trade on the NYSE (New York Stock Exchange) and the NASDAQ (National Association of Securities Dealers Automated Quotations). The Alerian MLP Index represents leading large-cap and mid-cap energy MLPs. Ten-year US government bond yields represent the risk-free yield on a security.

Navios to Maintain Strong Yield despite Distribution Cut

Interested in AMZ? Don't miss the next report.

Receive e-mail alerts for new research on AMZ

Success! You are now receiving e-mail alerts for new research. A temporary password for your new Market Realist account has been sent to your e-mail address.

Success! has been added to your Ticker Alerts.

Success! has been added to your Ticker Alerts. Subscriptions can be managed in your user profile.

Comparing dividend yields

As the above graph shows, even after the cut, Navios Partners’ dividend yield is above those of the broad MLP universe and energy MLPs. NMM’s current yield is two times that of the Alerian MLP Index. NMM’s current distribution is much more sustainable even in the face of the bleak outlook for the dry bulk sector. Its management has also reaffirmed the sustainability of this distribution going forward five years given the current market situation.

Yield is still attractive

As we mentioned in our previous discussion about NMM, even after a distribution cut due to the downside to the operating surplus, the dividend yield would still be attractive. While we had estimated a cut of 35%, the 52% cut also resulted in an attractive yield of 14.7%, as the stock price took a hit due to the sudden distribution cut.

Ship Finance International (SFL) also has an attractive yield of 10.5% while Diana Shipping (DSX) and DryShips (DRYS) don’t provide any dividends. NMM forms 6% of the Yorkville High Income MLP ETF (YMLP), which tracks an index of MLPs weighted in tiers based on their yield.

X

Please select a profession that best describes you: