Carnival Corporation vs. Textainer Group Holdings Limited: Which Stock's Dividend Dominates?

Two of the world's largest ocean-going companies square off in a battle of dividend fundamentals.

Apr 5, 2014 at 1:05PM

Dividend stocks outperform non-dividend-paying stocks over the long run. It happens in good markets and bad, and the benefit of dividends can be quite striking -- dividend payments have made up about 40% of the market's average annual return from 1936 to the present day.

But few of us can invest in every single dividend-paying stock on the market, and even if we could, we're likely to find better gains by being selective. Today, two of the world's largest ocean-going companies -- one dedicated to entertaining guests, the other focused on shipping the world's goods -- will square off in a head-to-head battle to determine which offers a better dividend for your portfolio.

Tale of the tape
Established in 1972, Carnival Corporation (NYSE:CCL) is the world's largest cruise operator. Its fleet of nearly 100 cruise ships boasts a total capacity of approximately 200,000 passengers. Carnival is the only company in the world to be listed as a component of both the S&P 500 index in the United States and the FTSE 100 index in the U.K. Headquartered in Miami, Fla., Carnival has more than 77,000 employees, and it operates a dozen leading cruise brands including Princess Cruise Line, Holland America, and Seabourn, as well as flagship Carnival Cruises in North America and its AIDA, P&O, and Costa Cruises lines operate out of European ports. The company also offers leisure services in 11 hotels or lodges and in 300 motor coaches and 20 glass-domed railcars.

Established in 1979, Textainer Group Holdings Limited (NYSE:TGH) is the world's largest lessor of intermodal containers, with a fleet of more than 2 million containers boasting total capacity of approximately 3 million 20-foot equivalent units. The company leases containers to more than 400 shipping lines and other lessees, and sells approximately 100,000 old and used containers to more than 1,000 customers across the world every year. Headquartered in Hamilton, Bermuda, Textainer operates through a network of 14 regional and area offices as well as in 400 independent depots around the world.




Market cap

$30.2 billion

$2.1 billion

P/E ratio



Trailing-12-month profit margin



TTM free cash flow margin*



Five-year total return 



Source: Morningstar and YCharts. * Free cash flow margin is free cash flow divided by revenue for the trailing 12 months.

Round one: endurance (dividend-paying streak)
According to Dividata, Carnival paid quarterly dividends for more than 20 consecutive years since it first began payments in 1989. That would be an easy win for Carnival over Textainer, whose dividend-paying streak only begins in late 2007, except for the fact that Carnival suspended its dividend in 2009 during the depths of the financial crisis.

Winner: Textainer, 1-0.

Round two: stability (dividend-raising streak)
Carnival's dividend suspension in 2009, and its unchanged payouts since 2011, give the cruise line no streak of dividend increases to speak of. Textainer, on the other hand, has been raising its dividend payouts almost every quarter since 2010 (payouts stayed the same for most of 2013), which allows it to snatch the stability crown as well.

Winner: Textainer, 2-0.

Round three: power (dividend yield)
Some dividends are enticing, but others are merely tokens that barely affect an investor's decision. Have our two companies sustained strong yields over time? Let's take a look:

CCL Dividend Yield (TTM) Chart

CCL Dividend Yield (TTM). Source: YCharts.

Winner: Textainer, 3-0.

Round four: strength (recent dividend growth)
A stock's yield can stay high without much effort if its share price doesn't budge, so let's take a look at the growth in payouts over the past five years.

CCL Dividend Chart

CCL Dividend. Source: YCharts.

Winner: Carnival, 1-3.

Round five: flexibility (free cash flow payout ratio)
A company that pays out too much of its free cash flow in dividends could be at risk of a cutback, particularly if business weakens. We want to see sustainable payouts, so lower is better:

CCL Cash Dividend Payout Ratio (TTM) Chart

CCL Cash Dividend Payout Ratio (TTM). Source: YCharts.

Winner: Carnival, 2-3.

Bonus round: opportunities and threats
Textainer may have won on the basis of its history, but investors should never base their decisions on past performance alone. Tomorrow might bring a far different business environment, so it's important to also examine each company's potential, whether it happens to be nearly boundless or constrained too tightly for growth.

Carnival opportunities:

  • Carnival rolled out a new marketing campaign and travel agent outreach program.
  • Carnival added two new ships -- the 3,500-passenger Royal Princess and the 2,200-passenger AIDAstella -- in the past year.
  • Carnival will replace three original Seabourn ships with new vessels by 2016.
  • Carnival plans to double its presence in China and launch new cruises from Japan.

Textainer opportunities:

Carnival threats:

Textainer threats:

One dividend to rule them all
In this writer's humble opinion, it seems that Carnival has a better shot at long-term outperformance, thanks to its long-term commitment to expand its geographical presence around the world. Carnival's recently benefited from the growth in consumer spending, despite a drop in average room rates. The company's persistence on social media platforms, coupled with the proper marketing and promotional campaigns, should also help it push past its recent PR catastrophes. Textainer's plans to expand its fleet are perhaps even more aggressive than Carnival's, but the company already struggles with excessive supply and underwhelming demand in the container-freight industry. You might disagree, and if so, you're encouraged to share your viewpoint in the comments below. No dividend is completely perfect, but some are bound to produce better results than others. Keep your eyes open -- you never know where you might find the next great dividend stock!

Nine rock-solid dividend stocks you can buy today
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend-paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

Alex Planes has no position in any stocks mentioned. The Motley Fool recommends Textainer Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers