To The Moon

What does a dividend yield of 99% mean? As long as the company keeps this dividend level, after one year, the stock will be given to you for nothing!

How to make it a 100% probability winning? Options can help you!

Stocks with stable high dividend will be more popular in the inflation age.

What company can achieve a dividend yield of 99%?

It went public in 2021. 52-week is US$68 in the beginning of the year was, now only US$27. It has paid dividends of nearly US $30, and the TTM dividend yield reaches 99%. It is $ZIM Integrated Shipping Services Ltd.(ZIM)$

ZIM is an Israeli shipping company, with a market value of $3.2 billion at present. Although it was only listed in 2021 (IPO price is $9.51), the company was founded in 1945.

Unlike $AP MOELLER - MAERSK A/S(0O77.UK)$, MSC, CMA CGM and$COSCO SHIP HOLD(01919)$, ZIM concerntrate on "Niche Route", that is, it is not a conventional route, but a specially customized shipping route according to the needs of users.

In other words,They can choose "profitable and efficient" lines as much as possible within their own carrying range, so as to operate in a relatively lightweight way.This is why ZIM's performance after the pandemic has been so excellent.

More profit means more capable of dividend. In March this year, it actually paid dividends of $17/share, and since its listing, the dividends reached $29.1.

What does this mean?

If you buy at the current price of $27.14 and get another $29 dividend in the next year, you can fully recover the cost even after deducting dividend tax. Then ZIM shares are just bonus!

Any risks.

Of course

The company is hard to maintain such a high dividend level.

What is level of dividend in the coming year?

How much a company pays dividends depends on how much profit it makes.

Many companies with long-term stable dividends have the basis of long-term stable profits.

ZIM's dividend is high, but not steady. Since its listing time not long, the current dividend yield of 99% could be the peak.

However, the management also declare it would increase dividend payout rate to over 30% on the basis of the previous 20%, and increased to 50% in the future. This also gives many investors hope.

Dividend payout ratio is the ratio of dividends paid to current profits.

ZIM's dividend payout rate for the past 12 months is 52%. From Bloomber, ZIM's EPS consensus next 12 month is 25.5 US dollars .If the company maintains a 50% dividend payout rate, the dividend will also reach $12.25, which is equivalent to 45% of the current $27.

That is to say, if ZIM's share price can remain at $27 after one year,With this dividend alone, there will be 40% after-tax income.

Of course, many friends also understand that dividends should be ex-dividend. That is to say, if $27 is divided into $10, it will directly remove the ex-right part of the stock price.

If stock price declines,  the price-earnings ratio declines too. So it can also attract more investors.

Although ZIM is not supported by various investment banks, hedge funds and pensions, its influence exists, and attracts a group of celebrities including Soros.

Although Soros has closes its position in Q2, Jim Simons, Jeremy Grantham and other bosses stil stand on. Some of them may have started to lose, but it may not be an opportunity for our investors who hold money.

What if the stock price falls?

Personally, I think the way ZIM does business may make its performance "return to normal" after explosive growth, but it will not plummet.

The biggest problem should be recession. The recession will definitely lead to the further contraction of the freight industry, resulting in a decline in the activity of freight transportation.

We can see from the Baltic Dry Goods Index (BDI) after Q1 this year that with the improvement of supply chain problems, the activity of shipping decreases, and with the increase of recession expectations, it is possible to fall further.

Comparing ZIM stock price with BDI, which is positively correlated most of the time, and occasionally negative correlation will be corrected within two months. From this point of view, this deviation after September this year is likely to be corrected in the next 1-2 months.

As for whether it will continue to soar, I am not sure.

But there is a factor that may bring some benefits.

Natural gas transportation. Winter is coming. Europe can't use Russian natural gas. It must be shipped from far away places, including the United States and AsiaZhou, even if it is transported from Norway to the European continent, it needs ships. ZIM has already cooperated with$Royal Dutch Shell PLC(RDS.A)$Signed a 10-year shipping agreement with more than $1 billion.

There is another factor that is China's reopen.

ZIM has a lot of business in Shanghai.

Even so, if the secondary market price continues to fall, we may not sit still. Because ZIM has options, and the exercise price of options will not change because of dividends, but will be reflected by the option price.

The simplest way,It is to bring the income into the bag in advance by means of "covered CALL".If dividends are paid at the end of November, the in-price options in December can be sold, even if they are very deep in the price, it doesn't matter. At most, the potential stock price rise income is not needed, but in exchange for stable dividend income.

Therefore, the operation is also very simple.

To sum up:

1. ZIM is a flexible shipping company, which is more resistant to fighting than ordinary shipping companies.

2. ZIM has a history of high dividends and the expect to keep high dividends, which can greatly enhance investment return.

3. If you are afraid of the stock price falling, sell the covered call option in advance and lock in the income in advance.

Good Luck and Happy Trading!