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Frontline’s Dividends Have Fallen Every Quarter in 2016

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Frontline’s cash flow

Frontline’s (FRO) operating cash flow in 3Q16 was $48.0 million compared to $32.0 million in 3Q15. That’s a 50.0% rise year-over-year. The company shares this cash through shareholder dividends.

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Dividends

Before the 2015 merger of Frontline and Frontline 2012, the company didn’t pay any dividends to its shareholders. The first dividend after the merger was in December 2015.

For the third quarter, the company announced a cash dividend of $0.10 per share, representing about a full payout of adjusted earnings per share. Quarterly dividend was lower than the previous quarter’s $0.20 per share and the first quarter’s dividend of $0.40.

Dividend yield

Frontline’s current dividend on November 30, 2016, was ~11.0%. Below are the dividend yields of its peers:

  • Nordic American Tankers (NAT): 12.1%
  • Teekay Tankers (TNK): 5.3%
  • Navios Maritime Partners (NAP): 16.3%
  • DHT Holdings (DHT): 2.1%

Frontline’s dividend investors should keep in mind that the company’s dividends are volatile since the company doesn’t follow a strategy of fixed dividends. Crude oil (DBO) tanker rates are seasonal, with the fourth quarter generally being the strongest. Due to seasonality, its quarterly revenues and profits fluctuate a lot, which impacts its net income.

The company pays a dividend equal to or close to EPS (earnings per share) adjusted for non-recurring items. Its dividends have fallen consistently every quarter. Its first declared dividend in December 2015 was $1.75 per share compared to the current quarter dividend of $0.10.

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