5-Star Stocks Poised to Pop: Ship Finance

• Report this Comment On December 19, 2011, at 9:53 AM, interd0g wrote:

  The article , and the opinions of the CAPS do not appear to reflect the recent debacle with FRO, a major customer and business partner of SFL.

  With FRO maneuvering to avoid bankruptcy, there will probably be a cut in dividend of 50% and a further fall in share value. After that, there may be an entry point.

  Wadayathink?

• Report this Comment On December 19, 2011, at 12:30 PM, VAContrarian wrote:

  There is already and entry point. The new dividend has been estimated by the company at .25 per quarter based on the adjustments made with Frontline. Therefore, it is currently yielding over 10% with the reduced dividend. That is not the old rate of 16% and I don't know why Motley Fool chooses to cite outdated information in current columns, but it is not helpful to its readers.

• Report this Comment On December 19, 2011, at 1:48 PM, TMFGalagan wrote:

  @VAContrarian -

  The reason we use the 16% rate is that it's the trailing dividend yield, and Ship Finance hasn't declared a new dividend rate - only speculated as to what a reduction might be. From SFL IR:

  It is expected that the near-term dividends will be adjusted to reflect a reduced net cash-flow, potentially reducing the base dividend to approximately $0.25 per share for the next quarter. If the market is higher than the new reduced base charter rates, significant additional cash will be generated with the potential to increase SFL's dividend in the future. Any final decision to pay dividends, and the amount of such dividends, is made by the Board of Directors on a quarter by quarter basis.

  http://www.shipfinance.bm/index.php?id=462&pressrelease=...

  Note that it says "potentially" and "expected." If the company declares a lower dividend, that's when you'll see it reflected in the yield.

  best,

  dan (TMF Galagan)

• Report this Comment On December 19, 2011, at 5:08 PM, cdvision wrote:

  SFL and TNK are in a portfolio of about 120 companies that I maintain as income investments and have been quickly climbing the ranks as the stocks I am down the most money on. The businesses are suffering from reduced earnings, but they are positive earnings, and the bills are getting paid. I think the price reflects the real possibility of dividend cuts, and we will need to see a growth in the world economy to see a growth in share earnings.

  That said, these are decent companies selling to a tremendous discount to their future "healthy economy" selves, and I am adding to them on a regular basis.

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