Anyone has FRO? :)

[fluffy]

Somebody brought this stock to my attention today: http://finance.yahoo.com/q?s=FRO They have been paying absolutely humangous dividends for a couple of years with seemingly stable revenues, earnings, and stock price. I realize that the company's recent success is tied to the oil boom, but is the risk involved in investing in it really so big that it negates the 30% dividend? Or am I just flat out missing something? Maybe brewer can chime in?

 

[brewer12345]

Trouble with FRo and any of the other ship owners with lots of ships on spot is that you have no way of knowing what rates the fleet will earn and thus what the div is. If you want big yield, I like DSX, QMAR, EGLE and maybe SFL, SSW and GSTL. They have more contract coverage of their fleets and the bulker companies (DSX, QMAR, EGLE and GSTL) have better industry fundamentals, IMO.

 

[fluffy]

Thanks, much appreciated! Sounds like I need to understand that industry a lot better before jumping in

 

[FIRE'd@51]

Without knowing the company, I looked at the data on your Yahoo summary page link, and see that the company paid out $10 on earnings per share of $6.89. If you look at analyst estimates for next year, they range from $0.92 to $4.99 per share. Clearly, they are paying out much more than they are earning, which suggests to me that the "dividend" is probably mostly return of capital. Also, I'm not sure I would call the stock price stable since it has dropped from 44 in August to 32.50 today.

 

[dm]

Ive had the stock for about 3 years. Not a big holding but it has done well. It has thrown off quite a bit in dividends and SFL stock over the last few years. But the price does fluctuate quite a bit. But Ive gotten much more than my initial investment back in dividends and SFL stock.

 

[maddythebeagle]

O0

sorry, couldnt resist

 

[brewer12345]

Ive had the stock for about 3 years. Not a big holding but it has done well. It has thrown off quite a bit in dividends and SFL stock over the last few years. But the price does fluctuate quite a bit. But Ive gotten much more than my initial investment back in dividends and SFL stock.

Sounds about right. The problem with the shipping stocks generally hasn't been lack of return; its been volatility. Now whether things will be as rosy going forward is another question. I think the outlook is best for the dry bulk sector, although containers and tankers should do well if we don't hit a global recession.