My High Dividend Stocks Blog

My High Dividend Stocks
This is my high dividend stocks site where I help site members find high dividend stocks with earning power and strong balance sheets.

Safe Bulkers (SB) will report 2nd quarter results on July 21st.

Safe Bulkers (SB) will report 2nd quarter results on July 21st.

http://finance.yahoo.com/news/Safe-Bulkers-Inc-Sets-Date-iw-3230380523.html?x...

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Safe Bulkers (SB) is smart to buy ships at deep discounts. Now that's capitalism.

Safe Bulkers (SB) is one of my favorite high dividend stocks because it has a good dividend record, stable earning power in the worst dry bulk shipping market since they have been keeping records, and their balance sheet is strong.  Safe Bulkers (SB) might buy up to 10 ships next year.  This is smart because there will be bargains to buy.  Successful businesses buy assets cheap and put them to work profitably.  If they make smart purchases, then they won’t damage their balance sheet in the process.

This is from Reuters India:

BANGALORE | Fri Jul 15, 2011 1:19am IST

BANGALORE (Reuters) - Safe Bulkers Inc(SB.N), the fourth-largest U.S.-listed dry bulk carrier by market value, may buy up to 10 vessels next year as the weak market promises cheap bargains, its top executive said.

The company expects the new vessels to start operating by 2013, helping it cash in on the improving market where demand will outpace deliveries leading to better freight markets.

"By this time next year, we will have opportunities to order more ships as prices next year will be lower which will enable us to buy more reasonably prices ships," Chief Executive Polys Hajioannou said in a telephone interview from Athens.

The Greece-based company has a fleet of 16 vessels -- mostly from Japanese shipyards -- which mainly carry thermal and coking coal and it has 11 vessels scheduled to be delivered at various times through 2014.

Hajioannou expects to have a "fire power" of about $320 million to buy vessels, with $160 million of that being raised as debt by offering ships as collateral.

"We hope that the shipyards, mostly Japanese, should deliver competitive prices next year. At the moment they are not delivering competitive prices because the yen is strong now," Hajioannou said.

Since the downturn, the price of a panamax vessel has fallen almost 30 percent to about $33.5 million currently and is expected to drop further to $30 million by the end of the year.

Ship owners went on an ordering spree before the economic turmoil, resulting in an oversupply condition that hit the market hard. This has also forced companies like DryShips Inc (DRYS.O) to diversify into drilling and tanker businesses.

Safe Bulkers, valued at $545.8 million, however, has no such plans.

"We will remain dedicated to bulk shipping," Hajioannou said. "We don't believe that companies should be active on too many fronts, as it becomes difficult to monitor all markets."

The CEO expects a better dry bulk market next year as Japan, a big commodity consumer, will import more iron-ore and coal to help the reconstruction of the quake-hit country.

Commenting on the issue of piracy, Hajioannou, who is also a founding member of the Union of Cyprus Shipowner, said the shipping sector will have to live with the reality of piracy off the Somalia coast.

Piracy attacks have risen by a third in the first half of the year, and become more violent, with pirates using grenade launchers, machine guns and other weapons.

"I don't think there's a political will from the governments to intervene," the football fan said.

(Reporting by Vaishnavi Bala in Bangalore; Editing by Saumyadeb Chakrabarty)

Link to original article: http://in.reuters.com/article/2011/07/14/idINIndia-58265820110714

Disclosure: I don’t own Safe Bulkers, but I’d like to.

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TIP OF THE WEEK - The Usefulness of Bollinger Bands

The Usefulness of Bollinger Bands

Jason Brizic

June 8, 2011

Bollinger Bands are a technical trading tool created by John Bollinger in the early 1980s. They arose from the need for adaptive trading bands and the observation that volatility was dynamic, not static as was widely believed at the time.

The purpose of Bollinger Bands is to provide a relative definition of high and low. By definition prices are high at the upper band and low at the lower band. This definition can aid in rigorous pattern recognition and is useful in comparing price action to the action of indicators to arrive at systematic trading decisions.

Bollinger Bands consist of a set of three curves drawn in relation to securities prices. The middle band is a measure of the intermediate-term trend, usually a simple moving average, that serves as the base for the upper band and lower band. The interval between the upper and lower bands and the middle band is determined by volatility, typically the standard deviation of the same data that were used for the average. The default parameters, 20 periods and two standard deviations, may be adjusted to suit your purposes.

You can use Bollinger Bands to help you time your purchase of high dividend stocks, commodities, and contrarian stocks.  Price bottoms tend to occur when the stock price lifts off the long downward slide down the lower band.  Price tops tend to occur when the stock price falls from hitting its head on the top of the upper band.  I use the MACD and CCI in conjunction with the Bollinger Bands to confirm a top or bottom because just using the Bollinger Band alone can get you burned (the UNG example below).

I use Bollinger Bands when I create free charts on www.stockcharts.com.

Here are the steps I take to setup my charts in less than 10 seconds:

  1. Leave the Type of chart: set to SharpChart.
  2. Type in the ticker symbol and click Go.
  3. Change the Period to Weekly.
  4. Scroll down to Chart Attributes; change Size to Landscape.
  5. Check the following checkboxes: Full Quote, Price Labels,
  6. Uncheck the Log Scale checkbox.
  7. Scroll down to the Overlays area.  Change the one that says –None- to Bollinger Bands
  8. Scroll down to the Indicators area.  Change the one that says RSI to CCI

I discovered the usefulness of Bollinger Bands when I tried to time the recent bottom in the gold price back in 2008  Here is the 3 year gold price chart:

Image002

http://stockcharts.com/h-sc/ui?s=$GOLD&p=W&b=5&g=0&id=p99091791121

When was the best time to buy gold on this chart? $681 in late October 2008.  What happened right after that point?  The price lifted off the bottom Bollinger Band.  The CCI was deep in the red and the MACD turned upward from negative territory.  Those confirmed the bottom.  I bought at $820.

The natural gas ETF trading as UNG provides a good example of how the solely relying on the Bollinger Bands alone can trick you into buying too high.  Look at this chart:

Image003

http://stockcharts.com/h-sc/ui?s=UNG&p=W&b=5&g=0&id=p99958479096

Wow!  This fund has lost a lot of money.  The price of UNG lifted off the bottom Bollinger Band many times, but never enough to bust through the middle band.  The CCI and MACD indicators were good at around March 2009, but the price didn’t break through the middle BB.  Knowing the fundamentals of UNG were horrible was enough to stay away from the fund.  However, just carefully examining the technicals was also enough.

I use the fundamentals to decide to buy or sell.  Then I use the technicals to time my entry or exit.  I will write about the CCI and MACD in upcoming tips of the week.

The fundamentals of Safe Bulkers were strong during the big market crash of 2008-2009.  You could have used Bollinger Bands to get this gem at around $3.00 per share.

Image004

http://stockcharts.com/h-sc/ui?s=SB&p=W&b=5&g=0&id=p24023572905

For more tips, go here:

http://www.myhighdividendstocks.com/category/tip-of-the-week

DryShips (DRYS) earns an upgrade. Why?

I read a short post on shipping upgrades and downgrades.  Here is the short post:

Shares of dry bulk shipping firm DryShips (DRYS) are soaring 3% after the stock earned its second upgrade this week. Sterne Agee raised its rating on the stock to “buy” from “neutral” with a $6 price target, which is more than 50% above where the shares currently trade. The research firm said the coming spin-off of the DryShips ocean rig unit could unlock value for shareholders.

The news isn’t doing much to help the fortunes of the Dry Bulk Shipping Stocks Index, which is down 1%. Earlier this week, Wells Fargo upgraded DryShips to “outperform” from “market perform” with a price target range of $5-$6.

Shares of Diana Shipping (DSX) are tumbling 5% on news of a Credit Suisse downgrade. The bank pared its rating on Diana to “underperform” from “outperform,” saying it expects supply to outpace demand in the dry bulk shipping market. The bank slashed its price target on Diana to $8 from $15 and the new price target is more than 25% below where the stock currently trades.

Looking at other Index members, Safe Bulkers (SB) is up 1% while Navios Maritime Holdings (NM) is up about half a percent. Eagle Bulk Shipping (EGLE) and Excel Maritime Carriers (EXM) are both lower by 1%.

Investors can track the Dry Bulk Shipping Stocks Index for performance trends and a suite of other metrics at tickerspy.com.

I like Safe Bulkers, but I like to check out the competition.  So I decided to take a quick look at DryShips.  Here is what I found.

DryShips (DRYS)

Market price: $4.20

Shares: 399.14 million

Market capitalization: $1.68 billion

Dividend record: no dividend since 2008.  The dividend was cut entirely in 2009.

Earning power: $0.16 average earnings @ 399.14 million shares

Recent EPS: $0.63

(earning adjusted for changes in capitalization; massive issuance of new shares since 2006)

            EPS       Net inc.             Adj. EPS

2006     $1.75    $57 M                $0.14

2007     $13.40  $478 M              $1.22

2008     ($8.11) ($361 M)           ($0.90)

2009     ($0.13) ($27 M)             ($0.07)

2010     $0.61    $173 M              $0.43

Five year average EPS is $0.16

Value price territory below 12 times average earnings = $1.97

Speculative price territory above 20 times average earnings = $3.20

DRYS trades at 26.25 times average earnings.  This is very speculative.

Balance sheet: Improving, mostly from issuance of new stock equities

Image003

Book value per share: $10.43

Price to book value: 0.40 (this is very good)

Current ratio: 0.72 (over 2.0 is good)

Quick ratio: 0.24 (over 1.0 is good)

Conclusion: no dividend, puny earning power, and a balance sheet based on stock issuance.  No thanks.  Chose the high dividend stocks Safe Bulkers instead.

Disclosure: I don’t own DryShips (DRYS) or Safe Bulkers (SB), but I want to own SB.

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Are you missing out on a 8.47 dividend yielder near it 52 week low?

Safe Bulkers (SB) is on sale.  Did you miss buying Safe Bulkers (SB) just 8.4 percent above its 52 week low?  Safe Bulkers closed at $7.22 per share today (+$0.14 from yesterday).  This high dividend stocks yield is currently 8.47 percent.  The $0.15 quarterly dividend is safe, it has average five year earning power of $1.90, and it balance sheet is good.
 
The present $0.15 quarterly dividend is safe even if you disregard the small amount Safe Bulkers revenue generated from several ships not on long term contracts.  Those ships are operating in the depressed spot market, but they are not idle.  Here is a summary of the company's contracted vessels over the next three years.  This information comes from Safe Bulkers latest quarterly earnings press release
     2011: 75% of Safe Bulkers 16 ship fleet is contracted.  25% of the fleet is operating in the spot market.
     2012: the contracted fleet ownership days drops to 59%.  39% would have to operate in the spot market unless SB finds some long-term contracts to enter into.
     2013: the contracted ownership days drops to a little more to 52%.  48% of the fleet is not under contract yet.
 
These number do not include the new-build addition of 14 new ships to the fleet between today and 2014.
 
How can I calculate estimated revenues for SB over the next few years?  Here is my formula.  I will multiple the number of ships in the fleet (16) times the number of days the fleet is contracted (365 x the contacted percentage) times the time charter equivalent from 2010 ($29,300).  Safe Bulkers time-charter equivalent was $29,300 per day per ship in 2010.  Think of this number as the average revenue number per ship per day.  Some ships are on contract for higher and some are on contract for lower, but $29,300 turns out to be the average for the company fleet overall.  This will give me the estimate revenue for each year for the ships already under contract.
 
     2011: $128.3 million revenue from contracted shipping
     2012: $100.9 million revenue from contracted shipping
     2013: $88.97 million revenue from contracted shipping
 
It costs $53.264 million dollars to operate and maintain the fleet of 16 ships per year using the cost rates from Safe Bulkers most recent quarterly income statement.  I'm including the ships operating on the spot market for costs, but I'm excluding them from the revenues to help prove how strong and safe SB's dividend is.
 
Estimated net income from contracted shipping
     2011: $75.036 million ($128.3 M - $53.264 M = $75.036)
     2012: $47.636 million
     2013: $35.706 million
 
Could Safe Bulkers pay its current dividend of $0.15 per quarter per share with just its contracted shipping over the next few years?  Yes, it could mostly pay the dividend over the next few years just with its currently contracted fleet.  Safe Bulkers had 71,633,284 shares outstanding as of May 2nd, 2011 (including the underwriters option to purchase 750,000 shares on top of the 70,883,284 outstanding).  It would cost SB $42.997 million dollars per year to pay its current dividend out to all those shares.  You can plainly see that most of the dividends can be easily covered with just the contracted ships in the fleet.  Keep in mind that annual interest expenses only amount to $6.8 million per year.
 
Take the numbers above and then factor in the fact that the ships in the spot market will be contributing to the revenue stream along with the new build ships.  You can see why Safe Bulkers dividend is safe.  Don't forget that the CEO's family owns 60% of the stock in the company.  They have a huge incentive to provide a sustainable dividend.
 
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More Motley Fools are taking notice of high dividend stock Safe Bulkers (SB)

The Motley Fools are taking notice of my current favorite high dividend stock – Safe Bulkers (SB).  I agree with the positive reasons for being long this stock.

Disclosure: I don’t own Safe Bulkers (SB)  right now, but I want to.   I’m working on freeing up some funds to purchase this high dividend stock while it is still on sale at a low price.

Click on this link to see all the articles I’ve written on Safe Bulkers:  http://www.myhighdividendstocks.com/category/high-dividend-stocks/sb

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4-Star Stocks Poised to Pop: Safe Bulkers

By Brian D. Pacampara | More Articles
May 31, 2011 | Comments (0)

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, dry bulk shipper Safe Bulkers (NYSE: SB  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Safe Bulkers' business and see what CAPS investors are saying about the stock right now.

Safe Bulkers facts

Headquarters (Founded)

Athens, Greece (2007)

Market Cap

$521.7 million

Industry

Shipping

Trailing-12-Month Revenue

$165 million

Management

Chairman/CEO Polys Hajioannou

CFO Konstantinos Adamopoulos

Return on Capital (Average, Past 2 Years)

13.3%

Cash/Debt

$48.2 million / $486.4 million

Dividend Yield

8.2%

Competitors

Eagle Bulk Shipping (Nasdaq: EGLE  )

DryShips (Nasdaq: DRYS  )

Navios Maritime Holdings (NYSE: NM  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 92% of the 228 members who have rated Safe Bulkers believe the stock will outperform the S&P 500 going forward. These bulls include dh1000 and All-Star TSIF, who is ranked in the top 0.1% of our community.

Earlier this year, dh1000 listed several of Safe Bulkers' positives: "Relatively new ships on contracts for varying periods of time (staggered terms) with solid customers; reasonable debt and good dividends."

Currently, Safe Bulkers even sports a cheapish P/E of 4.6. That represents a discount to rivals like Eagle Bulk (10.0), DryShips (6.1), and Navios Maritime (7.9).

CAPS All-Star TSIF elaborates on the bargain opportunity:

The excess shipping is creating bargains for those who can afford to buy new ones from cancelled orders left at distressed shipyards, but they have to come to market profitably. I think Safe Bulkers after it's drop the last two months has a decent chance of holding it's own, which is all you really need right now. If they can maintain thieir dividend, (which at today's depressed share price is almost 8%, they should be able to hold up handily against the S&P).

What do you think about Safe Bulkers, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!  

Link to original article: http://www.fool.com/retirement/general/2011/05/31/4-star-stocks-poised-to-pop-safe-bulkers.aspx

Safe Bulkers (SB) 7.82% dividend yield remains safe and on sale at $7.80 per share

Safe Bulkers (SB) remains on sale at $7.80 per share.  The company pays a $0.15 quarterly dividend that is safe.  The dividend yield for this high dividend stock is 7.82%.  The company has a five year average earning power of $1.50 per share.  And its balance sheet is good, but it could be improved upon.  I think it will improve once a few of its new-build ships begin operating over the next year.

The fundamentals are solid and have not changed.  Follow this link to read many recent articles on Safe Bulkers fundamentals:

http://www.myhighdividendstocks.com/category/high-dividend-stocks/sb

The technicals look good for market timing: http://bit.ly/3rySBchart

·         The continuous commodity indicator (CCI) is in negative territory.  The CCI tends to bottom at stock bottoms.

·         The stock price is barely below the 50 week moving average.  I like buying when the 50 week is below the 200 week moving average, but Safe Bulkers hasn’t been around for 200 weeks yet. 

·         The stock price is also sliding down the lower Bollinger Band.  Stock price bottoms tend to happen when the stock price jumps off the bottom Bollinger Band. 

·         I use the moving average convergence divergence indicator as a confirming indicator.  The MACD is a momentum oscillator based on the difference between two exponential moving averages.  See http://bit.ly/ChartSchool for a through explanation on each of these technical analysis terms.

You have a good reason to be concerned if you are only going to make a onetime purchase of SB.  This stock will go down if the S&P 500 goes down in reaction to a global double dip recession.  Dry bulk shipping moves the commodities that are necessary in a booming global economy.  A renewal of the global economic bust will drop dry bulk shipping stocks even though SB has long term contracts in place to whether the economic storm.  That will make it an extreme bargain with a huge dividend yield like in 2008 when the stock went below $3.00 per share temporarily.

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Video - Boyden Recommends Safe Bulkers (SB), Diana Shipping, Navios

You know I liked Safe Bulkers (SB) above $8.00 per share.  I really like it lately because the market participants are knocking the price down for no apparent reason.  There is a sale going on for the high dividend stock Safe Bulkers.  SB closed today at $7.70.  This makes no sense.

Yes, the Baltic dry index is meandering lower due to tons of new capsize ships entering service.  But all of Safe Bulkers capsizes are on long term contracts.  Only two of their 16 ships are the capsizes.  And they only have two more on the way out of about 11 new ships.  Even their unfinished capsizes are on contract for much higher prices than the low numbers being talked about in the video.

The dividend is safe and yielding 7.8% and climbing as the stock price goes 1% lower today.  The company has five year average earning power of $1.50 per share (easily enough to cover the $0.15 quarterly dividend).  It also has a good balance sheet.  So, I don’t believe me.  Well watch this video to hear it from someone else who is an analyst for some Wall Street firm.

Boyden Recommends Safe Bulkers, Diana Shipping, Navios

May 17 (Bloomberg) -- Natasha Boyden, an analyst with Cantor Fitzgerald LP, talks about her investment strategy for shipping industry stocks and her recommendations of Safe Bulkers Inc., Diana Shipping Inc. and Navios Maritime Acquisition Corp. shares. Boyden speaks with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg) (/Bloomberg)

Here is the video link in case the embedded video code doesn’t work: http://www.washingtonpost.com/business/boyden-recommends-safe-bulkers-diana-shipping-navios/2011/05/17/AF7Z925G_video.html#

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Safe Bulkers (SB) goes ex-dividend tomorrow yielding 7.2%

NEW YORK (TheStreet) -- The ex-dividend date for Safe Bulkers (NYSE:SB) is tomorrow, May 18, 2011. Owners of shares as of market close today will be eligible for a dividend of 15 cents per share. At a price of $8.09 as of 9:32 a.m. ET, the dividend yield is 7.2%.

The average volume for Safe Bulkers has been 251,600 shares per day over the past 30 days. Safe Bulkers has a market cap of $586.9 million and is part of the services sector and transportation industry. Shares are down 6.5% year to date as of the close of trading on Monday.

Safe Bulkers, Inc. provides marine drybulk transportation services worldwide. The company transports various bulk cargoes, such as coal, grain, and iron ore. The company has a P/E ratio of 4.8, below the average transportation industry P/E ratio of 5.2 and below the S&P 500 P/E ratio of 17.7.

Original link: http://www.thestreet.com/story/11121943/1/safe-bulkers-stock-to-go-ex-dividend-tomorrow-sb.html

Disclosure: I don’t own Safe Bulkers now, but I intend to in the future months.

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TIP OF THE WEEK - Why the dividend/earning yield ratio is better than the dividend payout ratio

Why the dividend/earning yield ratio is better than the dividend payout ratio

Jason Brizic

May 13, 2011

Rock solid high dividend stocks earn more than they payout in dividends year after year.  This ratio between earnings per share and dividends per share is commonly known as the dividend payout ratio.  A dividend payout ratio above 100% signals a possible dividend cut (especially the longer it stays above 100%).

The dividend payout ratio is nice but it only shows you the difference between the two numbers being compared.  There is another number that called the earnings yield that can be compared to the dividend yield.  Let’s compare three companies with some similar ratios.  Proctor & Gamble (dividend aristocrat) and Safe Bulkers have similar dividend payout ratios and div yield/earnings yield ratios, but much different dividend yields.  Safe Bulkers and WWE have high dividend yields, but very different ratios.

Proctor & Gamble (PG)

Safe Bulkers (SB)

World Wrestling Ent.(WWE)

Dividend/share

$2.10

$0.60

$1.44

Earnings/share

$4.32

$1.73

$0.72

Dividend Payout Ratio

48.6%

34.7%

200%

Dividend yield

3.0%

7.3%

13.9%

Earnings yield

5.7%

19.2%

4.8%

Div yld./Earning yld.

52.6%

38.0%

289%

It should be no surprise that WWE cut its dividend recently and now its dividend yield is in the 4-5% range.

You can use Morningstar.com to quickly find these yields.  Go to www.morningstar.com.  Type your stock ticker into the box at the top.  Then click on the Valuations tab.  Scroll down to the bottom of the page’s contents and you will see the dividend and earnings yields.  It looks like this:

Image002

I like to see double digit earnings yields with a slightly smaller dividend yield.  Safe Bulkers (SB) is a beautiful thing.  Click here to be taken right to the page:

http://financials.morningstar.com/valuation/price-ratio.html?t=SB

For more tips, go here:

http://www.myhighdividendstocks.com/category/tip-of-the-week