THE unit prices of shipping trusts have fallen so much that the dividend yields look unbelievable. Trouble is, they are based on past payouts. Who’s to know for sure if the payouts are sustainable in the future?
At least for now, Rickmers Maritime’s case seems to be that yes, they are gonna keep coming.
Things look steady based on what the company said yesterday (Feb 9) when announcing that the distribution per unit (DPU) for Q4 of 2008 is 2.25 US cents (5% higher than 4Q 2007) to be paid on 5 March.
The books closure date is 23 February.
At 3.39 Singapore cents X 4 quarters, the DPU will be 13.56 cents, which translates into a 2009 yield of 34% based on yesterday’s closing price of Rickmers stock of 39.5 cents.
The stock is trading at the low end of the $0.355 - 1.20 range of the past 52 weeks.
Four key points have been highlighted by Rickmers on its future:
1) All 13 of its vessels have been chartered out on long-term basis at fixed rates. Rickmers does not have near term exposure to volatile spot rates.
2) Strong cash flows expected in 2009 as a result.
3) Average remaining charter period is approximately 7.4 years.
4) All vessels, with the exception of Maersk Djibouti, do not have early termination clauses.
“The Group expects to weather this current downturn,” it said.
Negatives to note are:
* Distribution payout for Q4 2008 is 63% of distributable cash flow, down from the 72-87% range for the first three quarters of 2008. Cash retained is used for re-investment to ensure long-term sustainability of the trust.
* The continuing decline in ship values may impact Rickmers Maritime’s loan-to-value ratio.
For full statements by Rickmers, please visit company website.