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Despite dividends, Navios is still unattractive to many investors

Katie Dale - Author
By

Dec. 4 2020, Updated 10:52 a.m. ET

NMM dividend

Navios Maritime Partners (NMM) was trading at $18.62 in the beginning of 2014, while currently it has recorded a dip of 41.4% to trade at $11.21. Dividend yield for the company currently stands at 15.8% with the company recently paying a dividend of $0.4425 per common unit. The company believes that it has secured its dividend payouts.

Investors consider a dividend to be positive when the company has the ability to pay it on a longer term and when it is higher than the company’s earnings. In the latest quarter, NMM earned only $0.16 per share, and more than half of that $0.37 per share was in the form of an insurance settlement rather than from operations. Navios Maritime has only committed to pay out minimum distributions of $1.77 per unit through the end of 2015.

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Uncertain future

Navios Maritime Partners’ stock will likely drop in the upcoming quarters. Also, many of the company’s contracts are close to maturing, while a few contracts are priced higher than the current rates, which could lead to a risk in earnings recovery.

Adjusted net income estimates for fourth quarter 2014 stand at $16.3 million, as compared to $10.1 million in the corresponding periods last year. EBITDA is estimated at $43.1 million in the fourth quarter of 2014 compared to $36.3 million recorded in the year-ago quarter.

Based on the facts above, the company’s dividend paying capabilities are likely to be jeopardized. Thus, from an investor’s standpoint, Navios Maritime Partners may not be a safe income stream for stable quarterly dividend payouts.

Peer comparison

NMM peers like Safe Bulkers Inc. (SB), Navios Maritime Holdings (NM), and Navios Maritime Acquisition (NNA) recorded 5.6%, 5.9%, and 5.7% dividend yield in the latest reported quarter. Meanwhile, the Guggenheim Shipping ETF (SEA) reported a dividend yield of 3.5%.

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