Safe Bulkers (SB) has reduced its dividend amounts over the years as earnings declined and long-term contracts expired. In 1Q15, it reduced its dividend to $0.01 per share. This is its third consecutive dividend cut. Dividends are either expected to remain at this level or decline further for the foreseeable future as SB focuses on capital preservation.
Diana Shipping’s (DSX) management talked about reintroducing dividends when the company is near the upper part of the industry cycle. The company hasn’t paid dividends since 2008. The board decided to cut dividends in order to position the company to take advantage of attractive market opportunities but perhaps also to shield itself from weakness ahead.
Keeping dividends stable
As a limited partnership, Navios Maritime Partners LP (NMM) tries to keep distributions stable. In its 1Q15 earnings call, management stated that it’s “committed to a minimum distribution of $1.77 through 2016.” This is a 26.4% increase in annual distribution per unit since its inception in 2007.
Navios management said the company is prepared to increase distribution when the shipping market stabilizes. The company has diversified into containership vessels in order to keep distributions stable in the face of weak dry bulk industry fundamentals.
The above graph shows dividend yields for five companies. Navios Holdings and Safe Bulkers have dividend yields of 6.4% and 1.3%, respectively. In contrast, NMM has an attractive 17% dividend yield. DryShips and Diana haven’t paid dividends in a long time.