How Navios Partners’ Dividend Yield Compares to the MLP Universe
Because 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). While the S&P MLP Index represents a broad MLP universe, providing exposure to leading partnerships that trade on the NYSE, 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.
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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 2.8 times that of the Alerian MLP Index.
After the distribution cut, the distribution coverage is much more sustainable even in the face of a prolonged weak dry bulk market environment. Navios’ management has also reaffirmed the sustainability of this distribution going forward five years given the current market situation.
Downside to distribution limited
As of September 30, 2015, NMM had a cash balance of $32.9 million. With the long charters in container ships providing stable cash flows, and the earnings projections in the dry bulk sector even on a very weak scenario, they should yield a sustainable distribution coverage.
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 yields.