Star Bulk Carriers: The More It Falls, The Richer The Dividend Yields

seekingalpha11-23

Macro events surrounding the dry bulk industry remain mixed, albeit improved compared to pre-pandemic periods, with it already triggering higher contracted TCE rates for SBLK.These have directly ...

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overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nStar Bulk Carriers: The More It Falls, The Richer The Dividend Yields\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-23 23:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4739384-star-bulk-carriers-the-more-it-falls-the-richer-the-dividend-yields><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Macro events surrounding the dry bulk industry remain mixed, albeit improved compared to pre-pandemic periods, with it already triggering higher contracted TCE rates for SBLK.These have directly ...</p>\n\n<a href=\"https://seekingalpha.com/article/4739384-star-bulk-carriers-the-more-it-falls-the-richer-the-dividend-yields\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4585","symbol_name":"ETF&股票定投概念","start_time":0,"source_url":"https://seekingalpha.com/article/4739384-star-bulk-carriers-the-more-it-falls-the-richer-the-dividend-yields","article_id":"2485071952","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1990350877/image_1990350877.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485071952","pubTimestamp":1732374000,"columns":[],"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Macro events surrounding the dry bulk industry remain mixed, albeit improved compared to pre-pandemic periods, with it already triggering higher contracted TCE rates for SBLK.These have directly contr","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4585":"ETF&股票定投概念","BK4588":"碎股","SBLK":"Star Bulk Carriers Corp","BK4021":"海运"},"translate_title":"明星散货船：跌得越多，股息收益率越丰厚","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"SBLK":0.9},"content_text":"Macro events surrounding the dry bulk industry remain mixed, albeit improved compared to pre-pandemic periods, with it already triggering higher contracted TCE rates for SBLK.These have directly contributed to the company's robust FQ3'24 performance, healthier balance sheet, and richer dividend yields compared to historical levels.If anything, market players remain cautiously optimistic about 2025 and beyond, attributed to the Red Sea/ Ukraine conflict, impact of slow steaming, and the resultant supply/ demand imbalance.This is significantly aided by the higher iron ore production/ exports, growing grain trade in North America/ Ukraine, low new building order book, and the Fed's recent rate normalization.As a result, we believe SBLK investors may continue enjoying rich dividend yields ahead, no matter the volatility in the macro events.   Richard Drury    SBLK Continues To Offer A Rich Dividend Investment Thesis, Thanks To The Recent Correction We previously covered Star Bulk Carriers (NASDAQ:SBLK) in August 2024, discussing why we had continued to rate the stock as a Buy then, attributed to the promising FQ3'24 contracted TCE rates, rich FQ2'24 adj EBITDA margins, and ongoing macro events. While the recent merger was likely to be a near-term bottom-line drag, the management had expected to deliver improved synergy in its operations along with lower operating expenses over the next six quarters, with these efforts likely to ensure the safety of its dividend investment thesis. SBLK 1Y Stock Price Trading View Since then, it is undeniable that SBLK has had a volatile 1Y stock price performance, with the Red Sea conflict since October 2023 building upon the disrupted global trade from the ongoing Ukraine conflict since February 2022, along with the challenging supply/ demand imbalance after the worst of the COVID-19 pandemic. At the same time, the iron ore spot prices remain impacted compared to pandemic heights, with iron ore trade expected to decelerate to +1% YoY growth in ton-miles in 2025 (compared to +5.8% in 2024) - with it implying further pessimism in the dry bulk industry. These macro events have already given rise to the increasingly volatile Baltic Exchange Dry Index [BDI] along with the dry bulkers' volatile stock price movement, SBLK included, as the latter also loses most of its 1Y stock price gains. Even so, we believe that the mixed global macro events have been a boon to SBLK indeed, as observed in its ability to continue paying out variable dividends since mid 2021. Much of the tailwinds are naturally attributed to the dry bulker's ability to command the relatively rich overall TCE rates of $18.84K by FQ3'24 (-2.1% QoQ/ +25% YoY), compared to FQ4'21 heights of $37.4K and FY2019 normalized rates of $13.02K. This metric matters indeed, since it directly correlates to SBLK's robust FQ3'24 voyage revenues of $344.27M (-2.4% QoQ/ +54.3% YoY), adj EBITDA of $144.35M (-5.9% QoQ/ +71.4% YoY), and rich variable dividends paid out at $0.60 per share (-14.2% QoQ/ +172.7% YoY). The richer bottom-line performance has also contributed to the dry bulker's healthier balance sheet at a moderating net-debt-to-EBITDA ratio of 1.94x by the latest quarter, compared to the 2.15x reported in FQ2'24, 2.51x in FQ3'23, and 5.60x in FY2019 - with it underscoring the dry bulker's brilliant execution despite the challenging past five years. While SBLK may have offered a relatively lower fleet wide TCE rate guidance of $17.01K for FQ4'24 (-9.7% QoQ/ -6.9% YoY), we believe that the market correction may have been overly done indeed. This is especially since the guided Capesize TCE rates of $25.66K (-10.8% QoQ/ +4.2% YoY) remain well above the latest spot rates of $22K as of November 20, 2024, and the FY2019 Capesize TCE rates of $18K, with it underscoring the dry bulker's ability to remain profitable ahead. At the same time, we believe that the spot TCE rates are likely to remain elevated compared to pre-pandemic levels, attributed to the ongoing conflicts in the Red Sea/ Ukraine, the impact of the slow steaming from the IMO 2023, and the resultant supply/ demand imbalance. This is significantly aided by the higher iron ore production/ exports along with the growing grain trade in North America/ Ukraine, with the recent sell off from the September 2024 heights partly attributed to the normalization effect from the July/ August 2024 market rotation. Combined with the relatively low new building order book and the Fed's recent rate normalization, we expect the dry bulker industry to outperform expectations in the near-term, SBLK included. The Consensus Forward Estimates Tikr Terminal The same optimism has also been observed in the promising consensus forward estimates, with SBLK expected to continue generating richer adj EBITDA margins and positive Free Cash Flow through FY2026, with it allowing the dry bulker to continue deleveraging and paying rich dividends ahead. The same has been discussed in the recent Maritime CEO Forum in September 2024, with numerous dry bulk company CEOs being cautiously optimistic about 2025 and beyond. This is attributed to the \"real boost to infrastructural demand\" attributed to the ongoing wars, with Capesize TCE rates potentially hitting new heights of $30Ks upon the right mix of catalysts - a boon indeed, given that SBLK is now the largest US listed dry bulk shipping company with 156 of owned vessels.  So, Is SBLK Stock A Buy, Sell, or Hold?  SBLK 5Y Stock Price Trading View For now, SBLK has returned most of its 2024 gains, with it currently trading well below the 50/ 100/ 200 day moving averages while being well-supported at the 1Y floor of the $18s. Even then, we believe that the pullback has been a gift, with it already triggering highly opportunistic entry points for dividend investors seeking rich forward dividend yields of 13.98%, compared to its 5Y mean of 5.52% and the sector median of 1.40%. Even when compared to its dry bulker peer, including Golden Ocean Group Limited (GOGL) at forward dividend yields of 10.06% and Genco Shipping & Trading Limited (GNK) at 9.30%, SBLK's rich dividend investment thesis cannot be ignored indeed. As a result, we are reiterating our Buy rating, with the caveat that the SBLK stock is only suitable for those comfortable with variable dividends and moderate volatility, attributed to the inherently cyclical nature of the dry bulk industry. Moving forward, readers must also note that the management has guided sequentially elevated dry docking cadence through FQ3'25, with it implying further impact on its bottom-lines. While these efforts are attributed to the ongoing energy efficiency upgrading process and are likely to be bottom-line accretive, we expect potential near-term bottom-line misses from the consensus estimates, as observed over the past three consecutive quarters.  Combined with the mixed global macro events, SBLK investors may want to brace for further volatility in the intermediate term, while being paid rich dividend yields during the challenging few quarters ahead.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485071952"}