Can This Shipper Safeguard Your Portfolio?

The uncertainty and volatility in the markets have made risky calls more dangerous than ever for investors. One of the best ways to counter the ups and downs of the economy comes through dividend-paying stocks that can keep sending profit your way regardless of day-to-day bearish swings. Today let's take a look at one beaten-down stock, dry bulk shipper Navios Maritime (NYSE: NM  ) , which can provide serious shareholder income through a 6.5% dividend yield.

Sailing back from the brink
The entire dry shipping industry has taken a beating since the recession, with the stock prices of Navios and its industry rivals falling about 60% in the past five years. Former powerhouse DryShips (Nasdaq: DRYS  ) took the biggest blow, collapsing from $110 a share to a current price of $2.20. Obviously this entire sector could use a boost, and fortunately the tide has been rising lately across the board.

Company

P/E

Net Margin

Long-Term Debt/Equity

Dividend Yield

Navios Maritime 4.7 13.4% 1.31 6.5%
Diana Shipping (NYSE: DSX  ) 6.8 35.2% 0.33 N/A
DryShips N/A (12.8%) 1.21 N/A
Safe Bulkers (NYSE: SB  ) 5.2 49% 1.19 9.9%

With the notable exception of DryShips, these shippers have survived the bloodbath of the recession and recovered respectably. Only Navios and Safe Bulkers offer the promise of dividends, however, and Navios' low payout ratio of 30% gives the company more financial flexibility to raise that number than Safe Bulkers, which sports an unwieldy 50% payout ratio. Navios kept paying dividends right through the worst of 2008 even as its stock dove to unprecedented lows, a good sign for future dividend stability.

Safe passage for your portfolio
Navios' contracts should give wary investors comfort. The company has contracted primarily with Asian partners, benefiting from the region's stronger economic growth and reducing its exposure to volatile European markets. Despite the company's headquarters in turbulent Greece, most of Navios' ships are registered outside the EU, and the company operates heavily out of South America's ports.

Fears of a Chinese economic slowdown and the abysmal level of the Baltic Dry Index -- which measures shipping demand capacity against dry bulk carrier supply -- should weigh into an investor's decision on whether or not to pick up the stock. Wary investors might shy away from this beaten-down industry, but you can profit handsomely from Navios' superb combination of financial stability and solid dividends.

Smart investors in today's volatile markets need secure dividend-paying stocks in their portfolio. Fortunately, The Motley Fool has picked out nine great ones to safeguard your finances with in its special free report "Secure Your Future With 9 Rock-Solid Dividend Stocks."

Fool contributor Dan Carroll holds no positions in the stocks mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1988088, ~/Articles/ArticleHandler.aspx, 10/25/2014 4:13:05 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement