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Safe Bulkers (SB) reported 4Q2010 earnings of $0.47 per share; dividend of $0.15 per share.

Safe Bulkers Inc. (SB) reported 4Q2010 earnings of $0.47 per share and a continuation of the their $0.15 per share dividend.  Their dividend payout ratio is a very low 32%  for a high dividend stock.  SB closed at $8.95 today.  The stock currently yields 6.7%.  They are a dry bulk shipping company with 16 ships in their fleet.  I have written several articles on them because they are one of the best high dividend stocks in my opinion.

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

Here are some highlights from the earnings release (these are my words):

·         Their fleet is young.  The average age is only 3.80 years.  The assumption is that they are more fuel efficient and less maintenance costs than older vessels.

·         The dividend is stable and safe even at prevailing low Baltic Dry Index rates.

·         The vessel operating costs are up slightly, but do not threaten their large margins.

·         Earning power is stable.  Their fleet is 78% rented out for 2011, 59% in 2012, and 54% in 2013.  Most of their earnings are already known for the next few years.  Those earnings alone could easily cover their existing dividend rates.

·         They have a strong balance sheet.  Their debt is less than 50% of assets.  Their current ratio is good (current assets are over double of current liabilities

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Here is the Safe Bulkers press release with all the details:

SOURCE: Safe Bulkers, Inc.

 

Feb 09, 2011 16:05 ET

Safe Bulkers, Inc. Reports Fourth Quarter and Full Year 2010 Results and Declares Quarterly Dividend

ATHENS, GREECE--(Marketwire - February 9, 2011) - Safe Bulkers, Inc. (the "Company") (NYSE: SB), an international provider of marine drybulk transportation services, announced today its unaudited financial results for the fourth quarter and the year ended December 31, 2010. The Company also declared a quarterly dividend of $0.15 per share for the fourth quarter of 2010.

Summary of Fourth Quarter 2010 Results

-- Net revenue for the fourth quarter of 2010 increased by 13% to

   $41.3 million from $36.6 million during the same period in 2009.

-- Net income for the fourth quarter of 2010 increased by 34% to

   $31.1 million from $23.2 million during the same period in 2009.

-- EBITDA(1) for the fourth quarter of 2010 increased by 33% to

   $37.9 million from $28.4 million during the same period in 2009.

-- Earnings per share for the fourth quarter of 2010 of $0.47, calculated

   on a weighted average number of shares of 65,878,212, compared to $0.42

   in the fourth quarter 2009, calculated on a weighted average number of

   shares of 54,513,787.

-- Declaration of a dividend of $0.15 per share for the fourth quarter

   of 2010.

Summary of Twelve Months Ended December 31, 2010 Results

-- Net revenue for the twelve months ended December 31, 2010 decreased by

   5% to $157.0 million from $164.6 million during the same period in 2009.

-- Net income for the twelve months ended December 31, 2010 decreased by

   34% to $109.6 million from $165.4 million during the same period

   in 2009.

-- EBITDA for the twelve months ended December 31, 2010 decreased by 29% to

   $133.4 million from $187.6 million during the same period in 2009.

-- Earnings per share for the twelve months ended December 31, 2010 of

   $1.73, calculated on a weighted average number of shares of 63,300,466

   compared to $3.03 in the twelve months ended December 31, 2009,

   calculated on a weighted average number of shares of 54,510,587.

(1) EBITDA represents net income plus interest expense, tax, depreciation and amortization. See "EBITDA Reconciliation".

Fleet and Employment Profile

The Company's operational fleet as of December 31, 2010, was comprised of 16 drybulk vessels with an average age of 3.80 years.

As of December 31, 2010, the Company has contracted for eight additional drybulk newbuild vessels with deliveries scheduled at various times through 2013. The newbuilds consist of two Post-Panamax, three Kamsarmax, one Panamax and two Capesize vessels.

As of December 31, 2010, the remaining capital expenditure requirements for the delivery of the eight newbuilds, were $171.1 million for 2011, $70.4 million for 2012 and $22.2 for 2013. We anticipate satisfying these capital expenditure requirements from existing cash and time deposits, operating cash surplus and existing undrawn loan commitments.

On January 11, 2011, we contracted to acquire a Japanese-built, drybulk, Panamax-class newbuild at approximately $41.8 million, consisting of payments of $18.9 million and JPY 1.9 billion, with an expected delivery date in the first quarter of 2012.

As of January 31, 2011, the company has 1 existing and 8 newbuild vessels unencumbered and a $50 million long-term floating rate note facility against which additional loans can be drawn.

As of January 31, 2011, the contracted employment of the Company's fleet was 78% of fleet ownership days for the remaining days of 2011, 59% for 2012 and 54% for 2013, including vessels which are scheduled to be delivered to us in the future.

Dividend Declaration

The Company declared a cash dividend on its common stock of $0.15 per share payable on or about February 25, 2011 to shareholders of record at the close of trading of the Company's common stock on the New York Stock Exchange (the "NYSE") on February 18, 2011.

The Company had 65,879,916 shares of common stock issued and outstanding as of today.

The Board of Directors of the Company is continuing a policy of paying out a portion of the Company's free cash flow at a level it considers prudent in light of the current economic and financial environment. The declaration and payment of dividends, if any, will always be subject to the discretion of the Board of Directors of the Company. The timing and amount of any dividends declared will depend on, among other things: (i) our earnings, financial condition and cash requirements and availability, (ii) decisions in relation to our growth strategies, (iii) provisions of Marshall Islands and Liberian law governing the payment of dividends, (iv) restrictive covenants in our existing and future debt instruments and (v) global financial conditions. We can give no assurance that dividends will be paid in the future.

Management Commentary

Dr. Loukas Barmparis, President of the Company, said: "We are happy to announce today our unaudited financial results for the quarter and year ended December 31, 2010. Our revenues increased for the second consecutive quarter, supported by long term charters with our clients. Our Board has maintained a stable dividend policy by paying out a low percentage of free cash flows and declaring our eleventh consecutive quarterly dividend, of $0.15 per share, since our initial public offering in 2008. Our selective fleet expansion at attractive prices, funded to a large extent from operational surplus, will support our future revenues as newbuilds enter our fleet. We remain committed to the solid growth of our company, through flexible asset management and consistent chartering policy, for the benefit of our shareholders.''

Conference Call

On Thursday, February 10, 2011 at 9:00 A.M. EST, the Company's management team will host a conference call to discuss the financial results.

Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 (866) 819-7111 (US Toll Free Dial In), 0(800) 953-0329 (UK Toll Free Dial In) or +44 (0)1452-542-301 (Standard International Dial In). Please quote "Safe Bulkers" to the operator.

A telephonic replay of the conference call will be available until February 18, 2011 by dialing 1 (866) 247-4222 (US Toll Free Dial In), 0(800) 953-1533 (UK Toll Free Dial In) or +44 (0)1452 550-000 (Standard International Dial In). Access Code: 1859591#

Slides and Audio Webcast

There will also be a live, and then archived, webcast of the conference call, available through the Company's website (www.safebulkers.com). Participants in the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

Management Discussion of Fourth Quarter 2010 Results

Net income increased by 34% to $31.1 million for the fourth quarter of 2010 from $23.2 million for the fourth quarter of 2009. This increase is mainly attributable to the following factors:

Net revenues: Net revenues were $41.3 million for the fourth quarter of 2010, a 13% increase compared to $36.6 million for the fourth quarter of 2009. Net revenues increased due to increases in the number of operating days and the Time Charter Equivalent ("TCE")(2) rate. The Company operated 15.3 vessels on average during the fourth quarter of 2010, earning a TCE rate of $29,395, compared to 14.0 vessels and a TCE rate of $28,605 during the fourth quarter of 2009. The increase in the TCE rate resulted mainly from higher time charter rates.

Vessel operating expenses: Vessel operating expenses increased by 21% to $6.3 million for the fourth quarter of 2010, compared to $5.2 million for the same period in 2009. The increase in operating expenses is mainly attributed to an increase in ownership days of 9% to 1,409 in the fourth quarter of 2010 from 1,288 in the fourth quarter of 2009 and to a further increase in crew, repairs, maintenance, spare parts and stores costs associated with the delivery of our latest newbuild vessel Venus Heritage. Daily vessel operating expenses increased by 10% to $4,463 for the fourth quarter of 2010, compared to $4,053 for the fourth quarter of 2009.

(Loss)/Gain on derivatives: Gain on derivatives increased to $4.9 million in the fourth quarter of 2010, compared to a loss of $1.2 million for the same period in 2009, as a result of the mark-to-market valuation of the Company's interest rate swap transactions that we employ to manage the risk and interest rate exposure of our loan and credit facilities. These swaps economically hedged the interest rate exposure of the Company's aggregate loans outstanding. The average remaining period of our swap contracts is 3.2 years as of December 31, 2010. The valuation of these interest rate swap transactions at the end of each quarter is affected by the prevailing interest rates at that time.

Depreciation: Depreciation increased to $5.4 million in the fourth quarter of 2010, compared to $3.9 million for the same period in 2009, as a result of the increase in the average number of vessels operated by the Company during the fourth quarter of 2010.

Cash, time deposits & restricted cash: As of December 31, 2010, we had $100.4 million in cash and short-term time deposits, $5.4 million in long-term restricted cash and $50.0 million in a long-term floating rate note, from which the Company may borrow up to 80% under certain conditions. Additionally, we have $82.7 million in an undrawn loan commitments, $24.0 million to be secured by our existing vessel Panayiota K and $58.7 million to be secured by our newbuild with Hull number 1074 expected to be delivered by the third quarter of 2011, whilst our recently delivered post-panamax newbuild vessel Venus Heritage remains debt free.

(2) Refer to definition of "TCE" in Note 6 of Fleet Data Table.

Management Discussion of the Twelve months ended December 31, 2010 Results

Net revenues: Net revenues for the twelve months ended December 31, 2010 decreased by 5% to $157.0 million from $164.6 million during the same period in 2009. The Company operated 14.6 vessels on average during the twelve months of 2010, earning a TCE rate of $29,534, compared to 13.2 vessels and a TCE rate of $34,208 during the twelve months of 2009.

Net income: Net income for the twelve months ended December 31, 2010 was $109.6 million, a decrease of 34% from net income of $165.4 million for the twelve months ended December 31, 2009. The decrease of $55.8 million is mainly attributed to: (i) early redelivery income of $0.1 million, compared to $75.0 million, (ii) zero loss on asset cancellations, compared to $20.7 million, (iii) gain on sale of assets of $15.2 million, compared to none, (iv) a loss on derivatives of $8.2 million, compared to a loss on derivatives of $4.4 million, (v) depreciation of $19.7 million, compared to $13.9 million, (vi) interest expense of $6.4 million, compared to $10.3 million, (vii) vessel operating expenses of $23.1 million, compared to $19.6 million, and (viii) net revenues of $157.0 million, compared to $164.6 million, during the twelve months of 2010 and 2009 respectively.

          Unaudited Interim Financial Information and Other Data

                            SAFE BULKERS, INC.

        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

       FOR THE PERIODS ENDED DECEMBER 31, 2009 AND DECEMBER 31, 2010

                              Three Month Period      Twelve Month Period

(In thousands of U.S.          Ended December 31,      Ended December 31,

Dollars except for share   ----------------------  ----------------------

and per share data)           2009        2010        2009        2010

                            ----------  ----------  ----------  ----------

REVENUES:

Revenues                       37,435      41,908     168,400     159,698

Commissions                      (867)       (621)     (3,794)     (2,678)

Net revenues                   36,568      41,287     164,606     157,020

EXPENSES:

Voyage expenses                   (97)       (134)       (577)       (610)

Vessel operating expenses      (5,220)     (6,289)    (19,628)    (23,128)

Depreciation                   (3,941)     (5,421)    (13,893)    (19,673)

General and administrative

  expenses                      (1,544)     (2,011)     (7,046)     (7,018)

Early redelivery income             -           -      74,951         132

Loss on asset

  cancellations                      -           -     (20,699)          -

Gain on sale of assets              -           -           -      15,199

Operating income               25,766      27,432     177,714     121,922

OTHER (EXPENSE) / INCOME:

Interest expense               (1,523)     (1,652)    (10,342)     (6,423)

Other finance costs               (51)       (147)       (442)       (331)

Interest income                   298         380       2,164       2,627

(Loss)/gain on derivatives     (1,241)      4,882      (4,416)     (8,163)

Foreign currency (loss)/gain      (65)        287         838         281

Amortization and write-off of

  deferred finance charges         (20)        (50)       (106)       (266)

Net income                     23,164      31,132     165,410     109,647

Earnings per share               0.42        0.47        3.03        1.73

Weighted average number of

  shares                    54,513,787  65,878,212  54,510,587  63,300,466

                            SAFE BULKERS, INC.

             CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

               AS OF DECEMBER 31, 2009 AND DECEMBER 31, 2010

                                                  December 31, December 31,

(In thousands of U.S. Dollars)                        2009         2010

                                                  ------------ ------------

ASSETS

Cash, time deposits, and restricted cash               82,714      100,415

Asset held for sale                                    16,969            -

Other current assets                                    5,965        3,861

Vessels, net                                          373,924      541,244

Advances for vessel acquisition and vessels

  under construction                                    93,520       99,014

Other fixed assets, net                                    69            -

Restricted cash non-current                             4,763        5,423

Long-term investment                                   50,000       50,000

Other non-current assets                                  800        5,415

Total assets                                          628,724      805,372

LIABILITIES AND EQUITY

Current portion of long-term debt & liability

  directly associated with asset held for sale          50,242       27,674

Other current liabilities                              15,309       25,309

Long-term debt, net of current portion                420,994      467,070

Other non-current liabilities                          44,960       41,186

Shareholders' equity                                   97,219      244,133

Total liabilities and equity                          628,724      805,372

Fleet Data

                                    Three Months Ended  Twelve Months Ended

          &nbs

AGNC reports $1.26 per share in net income in really small print. The headline was $2.50 per share net income

If you just read the earnings headline, then you are missing the whole story.  Here are a few noteworthy line in the AGNC press release:

·         American Capital Agency Corp. (AGNC) reports $1.26 net income per share, excluding $1.24 of other income (mostly the sale of agency securities and derivatives paying off).  AGNC’s earning power is less than their dividend payments.

·         They paid a $1.40 dividend for 4Q2010.  Their net income doesn’t cover the dividend.  Dividend payout ratio was 111% excluding the irregular income items.

·         Leverage increasing in the quarter.  Leverage for the year equaled 7.8x; leverage for the quarter 8.4x.  AGNC, like all banks, are borrowed short and lent long.  They have a horrible balance sheet.

·         “As of December 31st, 2010, the Company had repurchase agreements with 22 financial institutions.”  They are 22 financial institutions away from a debt rollover problem.  Their current liabilities (repurchase agreements) dwarf their current assets.  That creates a weak balance sheet dependent on other institutions.

Delusional quote from the company’s chief investment officer, Gary Kain:

            “As we look ahead,” continued Mr. Kain, “we believe that the economic and competitive landscape is very favorable for our industry.  The changes we are witnessing at the GSE’s, coupled with the prepayment environment that is likely to be more benign, should provide for an attractive backdrop for mortgage investors.  When you combine this with a very steep yield curve, and a Federal Reserve that is likely to keep short term funding rates low for an extended period of time, we continue to remain optimistic.”

The yield curve will not remain steep with short term rates low and longer term rates much higher.  The front end (the short term) rates will rise and eventually it will invert.  Inverted yield curves occur when short term rates are higher than long term rates.  An inverted yield curve usually signals a recession is coming.  In our case it will be the double-dip recession.  Ben Bernanke said that QE2 would  lower mid-term interest rates.  The opposite is happening.

Conclusion: AGNC lacks earning power and a strong balance sheet.  Mr. Kain is a delusional Keynesian.  He will be speaking on February 10th, 2011.  You can see so for yourself.

American Capital Agency Corp. (Nasdaq: AGNC) ("AGNC" or the "Company") announced today that Gary Kain, Chief Investment Officer, is scheduled to make a presentation at the Credit Suisse 12th Annual Financial Services Forum on Thursday, February 10, 2011 in Miami, FL. The AGNC presentation is scheduled to begin at 2:45pm ET. The presentation will be webcast live and archived for 90 days on the AGNC website at http://ir.agnc.com.

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Here is the press release from AGNC: http://bit.ly/AGNC_4Q2010_earnings

American Capital Agency Reports $2.50 Earnings Per Share and $24.24 Book Value Per Share

 

BETHESDA, Md., Feb. 8, 2011 /PRNewswire/ -- American Capital Agency Corp. ("AGNC" or the "Company") (Nasdaq: AGNC) today reported net income for the fourth quarter of 2010 of $138.1 million, or $2.50 per share, and book value of $24.24 per share.

FOURTH QUARTER 2010 FINANCIAL HIGHLIGHTS

·         $2.50 per share of net income

o    $1.26 per share, excluding $1.24 per share of other investment related income and excise tax

·         $1.64 per share of taxable income(1)

·         $1.40 per share fourth quarter dividend paid on January 27, 2011

·         $0.60 per share of undistributed taxable income as of December 31, 2010

o    Undistributed taxable income was $39 million as of December 31, 2010, essentially unchanged from September 30, 2010

·         $24.24 book value per share as of December 31, 2010

o    Increased from $23.43 per share as of September 30, 2010

o    Increased from $23.78 per share, pro forma, as of September 30, 2010 when adjusted for the follow-on equity offering that closed on October 1, 2010

·         42% annualized return on average stockholders' equity ("ROE") for the quarter(2)

OTHER FOURTH QUARTER HIGHLIGHTS

·         $13.5 billion portfolio value as of December 31, 2010

o    18%(3) constant prepayment rate ("CPR") for the fourth quarter of 2010

o    16% CPR in December 2010 (based on data released in January 2011)

·         7.8x(4) leverage as of December 31, 2010

o    8.4x average leverage for the quarter

·         2.58% annualized net interest rate spread for the quarter

·         $354 million of net proceeds raised from follow-on equity offerings during the quarter(5)

o    $227 million raised from a follow-on equity offering that settled on December 14

o    $127 million raised pursuant to a Controlled Equity Offering(SM) Sales Agreement

o    In January 2011 raised an additional $719 million from a subsequent follow-on equity offering

o    All equity raised was accretive to book value

2010 FULL YEAR FINANCIAL HIGHLIGHTS

·         $7.89 per share of net income

o    $4.50 per share, excluding $3.39 per share of other investment related income, amortization expense associated with the termination of interest rate swaps during 2009 and excise tax

o    34% ROE

·         $5.60 per share dividends declared

o    $6.76 per share of taxable income(6)

o    Undistributed taxable income increased from $22 million as of December 31, 2009 to $39 million as of December 31, 2010

·         $1.76 per share or 7.8% increase in book value

o    Increased from $22.48 as of December 31, 2009 to $24.24 per share as of December 31, 2010

·         33% economic return

o    Represents the combination of dividends paid plus book value appreciation over the year

·         29% total return to shareholders

o    Represents the combination of dividends paid or accrued plus share price appreciation over the year

“We are proud of the performance of AGNC in 2010, successfully navigating multiple challenges in our markets,” said Malon Wilkus, Chief Executive Officer of AGNC, “We delivered a 33% economic return to our shareholders in 2010, counting dividends paid plus book value appreciation and a 34% return on equity.  We accomplished this due to the outstanding insights of Gary Kain our Chief Investment Officer and the AGNC team whose focus on relative value within the agency market proved highly successful.  During the year, we also expanded the team, deepening and enhancing our overall capabilities.  We are excited about the opportunity to perform for our shareholders in 2011 and beyond.”

"2010 was an extremely volatile year," said Gary Kain, Chief Investment Officer of AGNC, "where every quarter had significant and unique challenges in the mortgage market.  Despite this difficult backdrop, we were able to produce strong returns for our shareholders each quarter, broaden our shareholder base, and meaningfully grow our company.  We paid $5.60 per share in dividends for the year and grew our book value per share by $1.76 from $22.48 as of December 31, 2009 to $24.24 as of December 31, 2010.  We view the combination of these two metrics as an essential part of shareholder value creation over the long term.  We are proud of these accomplishments and believe that our emphasis on asset selection coupled with our active approach to portfolio management was instrumental to this success."

"As we look ahead," continued Mr. Kain, "we believe that the economic and competitive landscape is very favorable for our industry. The changes we are witnessing at the GSE's, coupled with a prepayment environment that is likely to be more benign, should provide for an attractive backdrop for mortgage investors.  When you combine this with a very steep yield curve, and a Federal Reserve that is likely to keep short term funding rates low for an extended period of time, we continue to remain optimistic."

INVESTMENT PORTFOLIO

As of December 31, 2010, the Company's investment portfolio totaled $13.5 billion of agency securities, at fair value, comprised of $9.1 billion of fixed-rate agency securities, $3.9 billion of adjustable-rate agency securities ("ARMs") and $0.5 billion of collateralized mortgage obligations ("CMOs") backed by fixed and adjustable-rate agency securities(7).  As of December 31, 2010, AGNC's investment portfolio was comprised of 40% </=15-year fixed-rate securities, 6% 20-year fixed-rate securities, 22% 30-year fixed-rate securities(8), 29% adjustable-rate securities and 3% CMOs backed by fixed and adjustable-rate agency securities.  

ASSET YIELDS, COST OF FUNDS AND NET INTEREST RATE SPREAD

During the quarter, the annualized weighted average yield on the Company's average earning assets was 3.48% and its annualized average cost of funds was 0.90%, which resulted in a net interest rate spread of 2.58%, versus the third quarter of 2010 net interest rate spread of 2.21%.  As of December 31, 2010, the weighted average yield on the Company's earning assets was 3.31% and its weighted average cost of funds was 1.03%.  This resulted in a net interest rate spread of 2.28% as of December 31, 2010, an increase of 12 bps from the weighted average net interest rate spread as of September 30, 2010 of 2.16%.  

The weighted average cost basis of the investment portfolio was 104.9% (or 104.5% excluding interest-only strips) as of December 31, 2010. The amortization of premiums (net of any accretion of discounts) on the investment portfolio for the quarter was $33.2 million, or $0.60 per share.  The unamortized net premium as of December 31, 2010 was $626.3 million.

The Company's asset yields benefited from a decline in the Company's projected CPR for the remaining life of its investments and from purchases of higher yielding securities toward the end of the quarter as the Company invested capital from its December capital raise after interest rates increased. Premiums and discounts associated with purchases of agency securities are amortized or accreted into interest income over the estimated life of such securities using the effective yield method. Given the relatively high cost basis of the Company's mortgage assets, slower prepayment projections can have a meaningful positive impact on asset yields.  The Company's projected CPR for the remaining life of its investments as of December 31, 2010 was 12%. This reflects a decrease from 18% as of September 30, 2010.  The decrease in the Company's projected CPR is largely due to increases in interest rates coupled with new purchases of lower coupon securities near the end of the quarter. The actual CPR for the Company's portfolio held in the fourth quarter of 2010 was 18%, an increase from 15% during the third quarter of 2010.  The most recent prepayment speed for the Company's portfolio for the month of January 2011 was 12%.

The cost of funds at the end of the quarter reflects both a higher relative interest rate swap portfolio to borrowings at the end of the quarter compared to the average during the quarter, as well as a temporary increase in repurchase agreement financing rates extending over the end of the year.

LEVERAGE AND HEDGING ACTIVITIES

As of December 31, 2010, the Company's $13.5 billion investment portfolio was financed with $11.7 billion of repurchase agreements, $0.1 billion of other debt(9) and $1.6 billion of equity capital, resulting in a leverage ratio of 7.5x.  When adjusted for the net payable for agency securities not yet settled, the leverage ratio was 7.8x as of December 31, 2010.  Due in part to the equity raise the Company completed towards the end of the fourth quarter, the Company's leverage at the end of the quarter was lower than the average leverage for the quarter of 8.4x.

Of the $11.7 billion borrowed under repurchase agreements as of December 31, 2010, $3.3 billion had original maturities of 30 days or less, $5.7 billion had original maturities greater than 30 days and less than or equal to 60 days, $1.5 billion had original maturities greater than 60 days and less than or equal to 90 days and the remaining $1.2 billion had original maturities of 91 days or more.  As of December 31, 2010, the Company had repurchase agreements with 22 financial institutions.    

The Company's interest rate swap positions as of December 31, 2010 totaled $6.5 billion in notional amount at an average fixed pay rate of 1.61%, a weighted average receive rate of 0.26% and a weighted average maturity of 3.1 years.  During the quarter, the Company increased its swap position by $2.5 billion in conjunction with an increase in the portfolio size.  The new swap agreements entered into during the quarter have an average term of approximately 3.8 years and a weighted average fixed pay rate of 1.35%.

The Company also utilizes swaptions to help mitigate the Company's exposure to larger changes in interest rates.  During the quarter, the Company added $850 million of payer swaptions at a cost of $4.6 million. The Company also had $200 million of payer swaptions from a previous quarter expire during the fourth quarter.  As of December 31, 2010, the Company still had $850 million in payer swaptions outstanding at a market value of $16.8 million.      

As of December 31, 2010, 55% of the Company's repurchase agreement balance and other debt were hedged through interest rate swap agreements. If net unsettled purchases and sales of securities are incorporated, this percentage declines to 53%.  These percentages do not reflect the swaps underlying the swaptions noted above.

OTHER INCOME, NET

During the quarter, the Company produced $68.5 million in other income, net, or $1.24 per share.  Other income is comprised of $10.4 million of net realized gains on sales of agency securities, $20.6 million of net realized gains on derivative and trading securities and $37.5 million of net unrealized gains, including reversals of prior period unrealized gains and losses realized during the current quarter, on derivative and trading securities that are marked-to-market in current income.  

Sales of agency securities during the quarter were largely driven by actions taken by the Company in the ordinary course in response to changing relative values perceived by the Company.  

The net gains (realized and unrealized) on derivative and trading securities generally represent instruments that are used to supplement the Company's interest rate swaps (such as swaptions, short or long positions in "to-be-announced" mortgage securities (TBA's) and short or long positions in treasury securities); however, these are not in hedge relationships for accounting purposes and consequently are accounted for through current income as opposed to shareholders' equity.  The Company uses these supplemental hedges to reduce its exposure to interest rates, which, given the increase in interest rates experienced in December, resulted in the significant net derivative gains discussed above and helped to protect the Company's book value.

TAXABLE INCOME

For the quarter ended December 31, 2010, GAAP income exceeded taxable net income by $0.86 per share.  This was comprised of $0.18 per share of net temporary differences between GAAP and taxable income related to premium amortization and net realized gains, as well as $0.68 per share of net unrealized gains, net of prior period reversals, associated with derivatives marked-to-market in current income for GAAP purposes, but excluded from taxable income until realized or settled.

NET ASSET VALUE

As of December 31, 2010, the Company's net asset value per share was $24.24, or $0.81 higher than the September 30, 2010 net asset value per share of $23.43, or $0.46 higher than pro forma net asset value per share of $23.78, when adjusted for the follow on equity offering that settled on October 1, 2010.  

FOURTH QUARTER 2010 DIVIDEND DECLARATION

On December 17, 2010, the Board of Directors of the Company declared a fourth quarter 2010 dividend of $1.40 per share payable to stockholders of record as of December 31, 2010, which was paid on January 27, 2011. Since its May 2008 initial public offering, the Company has paid or declared a total of $364.0 million in dividends, or $13.26 per share.  After adjusting for the fourth quarter 2010 accrued dividend, the Company had approximately $39 million of undistributed taxable income as of December 31, 2010, essentially unchanged from September 30, 2010. Undistributed taxable income per share as of December 31, 2010 was $0.60 per share.  

The Company has also announced the tax characteristics of its 2010 distributions. The Company's 2010 distributions of $5.60 per share consisted of $4.93 per share of ordinary income and $0.67 per share of long-term capital gains for federal income tax purposes. AGNC stockholders should receive an IRS Form 1099-DIV containing this information from their brokers, transfer agents or other institutions. For additional detail please visit the Company's Investor Relations website at www.AGNC.com.

(1) Based on the weighted average shares outstanding for the quarter.  Please refer to the section on the use of Non-GAAP financial information

(2) Annualized ROE based on net income and average monthly stockholders' equity for the q

Safe Bulkers dividend payout ratio remains low depsite an expected decline in earnings.

Let’s assume that the nameless analysts below are correct in that, “On average, analysts predict that Safe Bulkers, Inc. will post $0.38 EPS next quarter. The company has a market cap of $569.8 million and a price-to-earnings ratio of 5.04.”  Is the Safe Bulkers dividend threatened?

Safe Bulkers has been paying a quarterly dividend of $0.15 per share for two years.  Safe Bulkers dividend payout ratio will equal 39.4% if they continue to payout $0.15 per quarter.  This does not immediately threaten Safe Bulkers dividend.  I would take over a year of earnings erosion to threaten SB’s dividend.

Make no mistake, there is a ton of dry bulk tonnage (pun intended) coming into the market.  Many dry bulk shippers ordered ship to be built during the central bank fueled boom times of 2006-2007.  The Baltic Dry Index was at record high levels.  Then the central bank fueled bust came in 2008-2009.  Suddenly there was no need for all the ships being built in the shipyards.  Many dry bulk companies cancelled or delay delivery.  The delayed deliveries are sliding down into the water when the BDI is at near record lows.  I read last night than the tonnage available in the world wide fleet is about to be nearly doubled. (http://seekingalpha.com/article/250232-dht-the-silver-lining-in-the-shipping-cloud )

However, the need for Capesize dry bulk ships goes up if the Suez Canal gets shut down by Egyptian turmoil.

Safe Bulkers, Inc. (SB) Downgraded by FBR Capital (FBCM) to “Market Perform”

February 1st, 2011 • View CommentsFiled Under • by ABMN Staff

Filed Under: Analysts DowngradesMarket News

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Equities research analysts at FBR Capital (NASDAQ: FBCM) downgraded shares of Safe Bulkers, Inc. (NYSE: SB) from an “outperform” rating to a “market perform” rating in a research note to investors on Monday. The analysts currently have a $9.00 price target on the stock.

Separately, analysts at Zacks Investment Research downgraded shares of Safe Bulkers, Inc. from a “neutral” rating to an “underperform” rating in a research note to investors on Wednesday January 26th.

Safe Bulkers, Inc. (Safe Bulkers) is an international provider of marine dry bulk transportation services, transporting bulk cargoes, particularly coal, grain and iron ore, along global shipping routes for some of the global consumers of marine dry bulk transportation services. As of January 31, 2010, the Company had a fleet of 13 dry bulk vessels, with an aggregate carrying capacity of 1,077,900 deadweight tons (dwt) and an average age of 3.6 years. The fleet consisted of four Panamax vessels, three Kamsarmax vessels and six Post-Panamax class vessels. The Company’s subsidiaries include Efragel Shipping Corporation, Marindou Shipping Corporation, Avstes Shipping Corporation, Kerasies Shipping Corporation, Marathassa Shipping Corporation, Pemer Shipping Ltd., Petra Shipping Ltd., Pelea Shipping Ltd., Staloudi Shipping Corporation, Marinouki Shipping Corporation, Soffive Shipping Corporation, Eniaprohi Shipping Corporation and Eniadefhi Shipping Corporation.

Shares of Safe Bulkers, Inc. (NYSE: SB) traded up 2.13% during mid-day trading on Tuesday, hitting $8.65. Safe Bulkers, Inc. has a 52 week low of $6.50 and a 52 week high of $9.00. The stock’s 50-day moving average is $8.63 and its 200-day moving average is $8.07. On average, analysts predict that Safe Bulkers, Inc. will post $0.38 EPS next quarter. The company has a market cap of $569.8 million and a price-to-earnings ratio of 5.04.

Original link to article: http://www.americanbankingnews.com/2011/02/01/safe-bulkers-inc-sb-downgraded-by-fbr-capital-fbcm-to-market-perform/#

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Do You Need an Oil Stock for Your High Dividend Stock Portfolio?

SeaDrill (SDRL) caught my eye as a high dividend stock.  This deep water oil drilling company currently yields 7.54%.  It paid over $0.60 for the past three quarters.  However, it only has a three quarter dividend record.  Time will tell if this stock will be a reliable dividend payer.

Here is the description from Google Finance:

SeaDrill Limited is a Bermuda-based company active within the oil and gas industry. Its activities are of an offshore drilling contractor. The Company operates a fleet of 36 offshore drilling units, including eight units under construction, which consist of 10 jack-up rigs, 10 semi-submersible rigs, four drillships and 12 tender rigs. It operates three business segments. The Mobile Units business segment offers services including drilling, completion and maintenance of offshore wells. The Tender Rigs business segment operates self-erecting tender rigs and semi-submersible tender rigs. The Well Services business segment provides services using platform drilling, facility engineering, modular rig, well intervention and oilfield technologies. SeaDrill Limited operates through subsidiaries in Bermuda, Norway, Cayman Islands, British Virgin Islands, Cyprus, Nigeria, Liberia, Hungary, Singapore, Brazil, Hong Kong, Panama, the United Kingdom, Denmark, Malaysia, Brunei and the United States.

This stock’s price will correct when the price of oil corrects.  A continuation of the global recession, government debt crisis, and or a busting of China’s real estate and construction bubble will cause the price of oil to go down.  War with Iran (coupled with Iranian government sinking of oil tankers in the Straits of Hormuz), Keynesian money printing, large oil spills (Gulf of Mexico), and commercial banks resuming lending like in 2006 will all lead to higher oil prices.

The P/E is reasonable at 12.06.  Debt is less than 50% of assets.  I will analyze earnings and balance sheet in great detail in the future.

If you can’t wait for my analysis of their earnings power and strength of their balance sheet, then wait for this stock to pull back to below $20.00 per share like in May through July 2010.

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Don't believe the REIT dividend stablity hype.

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Don’t believe the hype that REIT’s dividends are any more stable than government bonds.  REITs like American Capital Agency Inc. (AGNC) are benefiting temporarily from abnormally low interest rates caused by massive Federal Reserve money printing.  Interest rates have nowhere to go but upward.  It is just a matter of time until bond investors wake up, smell the smoke, and start running for the exits.  Don’t get trampled.

The market participants can see all the money printing.  They will demand an inflation premium for the bonds they are prepared to purchase.  This means that they demand higher interest rates.  Higher interest rates will squeeze AGNC’s profits.  They will be forced to cut their dividend drastically.  Just understand the risks of owning AGNC shares.  Their dividends are enormous right now.  That is mighty tempting.  Don’t let your AGNC shares exceed 5% of your high dividend stock portfolio.

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SOURCE: The Bedford Report

 

Jan 31, 2011 11:25 ET

REITs Remain the Top Destination for Dividend Investors

The Bedford Report Provides Analyst Research on Annaly Capital & American Capital Agency

NEW YORK, NY--(Marketwire - January 31, 2011) - In the past year Real Estate Investment Trusts (REITs) have been one of the most popular investments in the financial sector. Since the start of 2010, the Vanguard REIT ETF has surged more than 30 percent while the overall financial sector has been relatively neutral. REITs' ability to generate this significant capital appreciation is one of the industry's main allures, as most investors flock to REITs for their hefty dividends and stability. In fact, most of the success of the industry in the last year can be attributed to low interest rates. When interest rates get this low the return on dividends can far exceed that of bonds. The Bedford Report examines the outlook for diversified REITs and provides research reports on Annaly Capital Management, Inc. (NYSE: NLY) and American Capital Agency Corporation (NASDAQ: AGNC). Access to the full company reports can be found at:

www.bedfordreport.com/2011-01-NLY

www.bedfordreport.com/2011-01-AGNC

The Vanguard REIT index had been stagnant for most of January, however it surged last week as investors bought up a number of the fund's top components on speculation of a wave of M&A activity in the industry.

M&A speculation in the REIT sector increased after ProLogis confirmed it is in talks with rival AMB Property about a possible merger. The two industrial REIT giants have a combined market cap of $13.9B, and are considering an "all-stock, at-market transaction, based upon the unaffected trading prices of the two companies' stock prior to media reports of a possible merger."

The Bedford Report releases regular market updates on REITs so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at www.bedfordreport.com and get exclusive access to our numerous analyst reports and industry newsletters.

Companies such as American Capital Agency and Annaly earn their money on the spread between low-interest short-term borrowing and purchasing high-interest long-term securities, which leads to solid profits given the current conditions. Federal Reserve Chairman Ben Bernanke says that he is prepared to keep rates in the range of 0 - 0.25 percent for an extended period if the unemployment numbers don't drop significantly.

Solid profits for a REIT keep those dividend payments stable. Presently, American Capital pays an annual dividend of 5.60 for yield of about 19.60%. Annaly, meanwhile, pays an annual dividend of 2.56 for a yield of 14.40%. While high yielding dividend paying stocks are appealing, be forewarned that companies can cut, slash, or suspend dividends at any time, often without notice.

Link to original article: http://www.marketwire.com/press-release/REITs-Remain-the-Top-Destination-for-Dividend-Investors-1387799.htm

Don't Trust the Inflation Numbers

Don’t trust the government reported price inflation numbers otherwise known as the consumer price index (CPI).  The government’s Bureau of Labor Statistics under-reports the true price increases that we all experience as we buy food, shelter, energy, healthcare, entertainment, and transportation.  I wrote about this in greater detail in August of 2010:

http://bit.ly/riggedCPI

You might be asking yourself why would the BLS change their methodology for computing the CPI?  The reason is simple.  The two largest federal welfare programs: Social Insecurity and Medicare would go broke dozen of years earlier without the rigging of the CPI.  It is in every president’s and congress’ best personal best interest to delay the day of reckoning.  Rigging the CPI helps to kick the can.

The Federal Reserve and the monetary base

There will be massive price inflation caused by all the money that the Federal Reserve has created out-of-thin-air since late 2008.  The Wall Street Journal author does not understand the mechanics of money creation.  The Federal Reserve creates the money and buys assets (usually US government debt like they are doing now with QE2).  This expands the FED’s balance sheet and adds money to the monetary base.  Prices don’t go up until the monetary base gets transformed into money that actually goes into people’s bank accounts. 

The fractional-reserve banking process in a nutshell

The banks receive the freshly printed dollars or digital dollars in their accounts for the US government debts that they sold to the Federal Reserve.  The banks can then lend almost all of the money they received from the FED – OR – they can choose to not lend it.  They have chosen to lend very little of it.  They call the money above the legal reserve requirement the  “excess reserves”.  The banks are holding over a trillion dollars as excess reserves.  When banks lend they create new money.  For example, if the legal reserve requirement was set at 10% (it is much lower than this), then Bank A that received a $1,000 deposit from a customer would be allowed to lend $900 and would have to keep $100 as reserve.  The person who received the $900 loan from Bank A would deposit $900 into his checking account at Bank B until he was ready to spend the loan money.  Bank B could loan $810 to someone else while keeping $90 (10%) as legal reserves.  This is how money is created.  A $1,000 increase in the monetary base multiplies many times through this process.  The M1 money supply increases.  Prices increase.

If the banks lent that money in a manner like they did in 2006, then prices would roughly double in a relatively short time.  Keep this in mind as you read the WSJ article below.

Economy by Brett Arends (Author Archive)

Don't Trust the Inflation Numbers

A surprising number of people on Wall Street will tell you not to worry too much about inflation.

After all, they'll say, just look at the numbers. The inflation picture is incredibly benign. In the past 12 months the Consumer Price Index has risen just 1.5%—a remarkably low rate. And when you strip out volatile food and energy costs, they'll say, it's even lower—a meager 0.8%.

It doesn't stop there. Many economists will point out that wages are also rising by less than 2% a year. With so many people still out of work, goes the line, labor costs are going to stay low for a long time too. So what's the worry?

Clearly, a lot of investors agree. Inflation-protected government bonds, which people would buy to protect themselves if they were worried, have fallen in price in the past couple of months. Gold, another inflation hedge, is down. Ten-year Treasury bonds yield less—3.3%—than they did when President Eisenhower left office.

It's crazy. There is plenty to worry about. As you battle to manage your family's finances, be aware that there are three reasons why inflation needs to be on your radar screen.

• First, the official inflation numbers should be taken with a fistful of salt.

Over the past 30 years, the federal government has made a lot of changes to the way it calculates inflation. It's taken place under presidents of both parties. Each change in methodology has come with plausible-sounding justifications. But, as if by magic, each change has had the effect of flattering the numbers. Funny, that.

According to one rogue economist, John Williams at Shadow Government Statistics , if we still calculated inflation the way we did when Jimmy Carter was president, the official inflation figures would look about as bad as they did when ... Jimmy Carter was president. According to Mr. Williams's calculations, if we counted inflation under the old system the official rate wouldn't be 1.5%. It would be closer to 10%.

Mr. Williams is just one voice. But it makes sense to treat the government numbers with skepticism.

Under the official calculations, if steak prices boom, the government just assumes you buy cheaper hamburger instead. Presto—no inflation!

Or consider the case of Apple ( AAPL: 344.46*, +3.06, +0.89% ) computers. We all know Macs are expensive. And we know Apple doesn't discount. The cheapest Mac laptop today costs $999. A few years ago, it also cost $999. So the price is the same, right?

Ha. Not according Uncle Sam. Using a piece of chicanery called "hedonics," Uncle Sam calls this a price cut. His reasoning? You're getting more for the money. Today's $999 Mac is lighter, fancier and faster than last year's $999 Mac. So the government calculates that the "real" price has actually fallen.

How's that work in the real world? Try it. Go into your local Apple store and ask for 50% off thanks to hedonics. (If you do, please, please video the exchange and put in YouTube. We could all use a good laugh.)

Instead, the government is worrying about deflation, partly because of all the "cheap" MacBooks out there.

• The second reason to treat the official inflation figures with some mistrust is that they look backward. They register what just happened, not what's about to happen next.

OK, so the prices of many things haven't risen. Yet. But if the laws of economics mean anything, they will have to. Why? Because costs are rising.

Economists need to stop focusing just on labor costs. The world has plenty of surplus labor. But look at raw materials. Around the world prices are skyrocketing, from copper to cocoa. The United Nations Food Price Index has just hit a new record high. Oil's back near $90 a gallon. Wheat prices have nearly doubled since last summer.

Soaring food prices helped spark the revolution in Tunisia. According to Alex Bos, commodities analyst at Macquarie Securities in London, other governments—especially in North Africa—have responded with panic buying of foodstuffs.

Algeria alone, he says, has bought about 1.5 million tons of wheat this month—maybe triple its usual amount. Saudi Arabia is rushing to build up grain supplies. Corn supplies are as tight as they were back in the inflationary 1970s.

Sooner or later this is going to show up in your supermarket, or at the mall, in higher prices.

Just ask McDonald's ( MCD: 75.40*, -0.08, -0.10% ) . Or paints and plastics giant DuPont ( DD: 50.36*, +1.32, +2.69% ) . Or Kleenex and Huggies maker Kimberly-Clark ( KMB: 65.21*, -0.40, -0.60% ) . Or 3M ( MMM: 89.18*, +0.68, +0.76% ) . Or Coach ( COH: 54.61*, +1.52, +2.86% ) . These companies, and many others, have warned in recent days that they're getting squeezed by rising costs. They'll either eat the costs, which will hit the stock, or pass them on. How is this not inflation?

• The third reason to be mistrustful of the inflation picture? Simple. Economics.

We are flooding the world with extra dollars. The Fed simply invents as many as it likes. In the past couple of years, to try to keep the economy out of a tailspin, it has more than doubled the size of the so-called monetary base.

A dollar bill has no intrinsic value. Dollars are only "worth" something because you can exchange them for a haircut, or a pair of shoes, or a book from Amazon.com ( AMZN: 175.63*, -1.07, -0.60% ) . So if you drastically increase the number of dollars without a commensurate increase in the number of goods and services, each dollar must, by definition, be worth less. That's another way of describing inflation.

So far, this inflation seems to have shown up in the unlikeliest of places. It's like Whac-A-Mole. The price of vintage wines has skyrocketed 57% in the past year, according to the Liv-ex Fine Wine 50 Index . Real estate prices across China are in a bubble. So long as the Chinese tie themselves to the U.S. dollar, they are importing our inflation. But, once again, one wonders how this can be called benign.

Is inflation certain? I'm wary of any predictions. Casey Stengel once said, "Never make predictions, especially about the future." Mr. Stengel would have lasted three days as a Wall Street analyst. But he won five World Series in a row, and he knew a thing or two.

Maybe inflation really will stay tame. But I'm not counting on it. I'm not buying the conventional wisdom, and neither should you.

Published January 26, 2011

Read more: ROI: Don't Trust the Inflation Numbers - SmartMoney.com http://www.smartmoney.com/investing/economy/roi-dont-trust-the-inflation-numbers-1296052731208/#ixzz1CAwwqdMx

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AGNC Will Report 4Q2010 Earnings on February 8th

American Capital Agency Corp. (AGNC) will report 4th quarter 2010 earnings after the US markets close on February 8th, 2011. The company said earlier this month that earnings would exceed $1.20 per share. Unnamed analysts expect earnings of $1.29 per share. AGNC also reported that they would pay another dividend of $1.40 per share. Expect a dividend cut in an upcoming quarter because their dividend payout ratio exceeds 100% and has exceeded it for more than one quarter.

I think this confirms the fact that AGNC does not have the earning power to sustain a $1.40 per share dividend. Be sure to subscribe to www.myhighdividendstocks.com/feed to receive more AGNC analysis delivered to your reader once their quarterly report is available.

Disclosure: I don't own AGNC.

Here is the link to the press release: http://finance.yahoo.com/news/AGNC-Will-Report-Q4-2010-prnews-3553937482.html...

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Past Prosperity is no Gurantee of Future Earnings Success.

You should always question the indefinite continuance of past prosperity in your high dividend stock earnings.  Below are some examples for you to consider.  Do any of the stocks in your portfolio have any of these traits?
 
Companies with a single successful product that can lose market share rapidly as competition encroaches with new generic products.  Small biopharma stocks come to mind here.  Their successes will typically be short lived.  The stability of their earning power is constantly threatened.  US patent protection can't protect them in a worldwide economy.  Chinese drug factory owners don't care about American patent laws.  The generic drug manufacturers can sell their products to Canadian and Mexican distributors.  Those distributors can resell them to Americans trying to escape the ever rising drug prices caused by the evil Federal Reserve and health care fascism.
 
Any company that relies on a fad should not be counted on to maintain its earnings growth beyond the duration of the fad.  Crocs (CROX) and other fashion fads come are good examples of this.  Trendy products grow quickly to peak popularity and then quickly fade.
 
There will be an earnings explosion for companies that produce a good that the people calling themselves the government re-legalize.  The initial goods producers enjoy high prices until the supply catches up to demand.  Here are some examples of such transitory profits: rare earth metals mining, nuclear power plants, offshore oil drilling, and marijuana production (in several States).  This exact situation occurred in 1933 when a bunch of brewery stocks came back into the market after the US government's tyrannical prohibition of alcohol.
 
You should be wary of large profits in the stocks you own that are likely to be transitory in nature.  These transitory profits can cause you to overestimate the earning power of a company.
 
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Dry-Bulk Shipping Extends 2011 Drop to 20% on Australia Floods

The news for existing capesize ship owners is not good.  Rents for the largest vessels (capesize) are down to $9,143 per day.  That is the lowest level since January 2nd, 2009.  To understand the magnitude of the loss of revenues to the ship owners consider the fact that rents averaged $110,000 per day back in 2007 and 2008.  Those high rents caused ship owners to order more capesized vessels because they looked profitable.  Then the global recession caused by Keynesian central bank actions from 2003-2007.  The recession revealed the malinvestments of the ship owners.  Rents fell in free fall until January 2nd, 2009.
 
Capesized rents increased over the course of the next two years as the Keynesian central bankers pumped trillions of counterfeited dollars into the world's economies.  The false recovery coupled with a glut of capesized vessels are now putting pricing pressure on capesized rents.
 
However, this is somewhat good news for Safe Bulkers Inc. (SB).  They entered into a shipbuilding contract for the construction of a Chinese-built, drybulk Capesize-class vessel of approximately 180,000 deadweight tons at a contracted price of $53 million, with an expected deliver of the third quarter of 2012.
 
One of the reasons that I like Safe Bulkers is that this vessel will be employed for ten years at a gross daily charter rate of $24,810, less 1.25% total commissions.  Most of their existing fleet along with the new vessels are locked in for several years.  Their earning power is foreseeable.  There ships will be bargains when worldwide inflation takes off from the trillions of dollars printed in late 2008 to the present.
 
 
Dry-Bulk Shipping Extends 2011 Drop to 20% on Australia Floods
January 19, 2011, 11:20 AM EST
By Alistair Holloway

Jan. 19 (Bloomberg) -- The Baltic Dry Index, a measure of commodity-shipping costs, extended this year’s decline to 20 percent as Australian flooding curbed cargo volumes and new capesize ships joined the fleet.

The index fell 21 points, or 1.5 percent, to 1,411, according to data from the Baltic Exchange in London. Daily rents for capesizes that haul coal and iron ore led declines, dropping 4.1 percent to $9,143, the lowest level since Jan. 2, 2009. That means the biggest ships in the gauge are the cheapest to hire.

Australia’s Queensland state, producer of about half the world’s seaborne supply of coking coal to make steel, suffered its worst flooding in 50 years this month, shutting mines and railroads. The state today cut its coking-coal output forecast for the year ending June 30 by 10.5 percent. The capesize fleet’s carrying capacity will swell by 18 percent this year, according to fund managers and analysts surveyed this month by Bloomberg.

“It’s a combination of Australia, plus continued deliveries of capesizes,” Philippe van den Abeele, managing director of Castalia Fund Management (U.K.) Ltd. in London, said by phone. “We are down to levels that are really hurting owners.”

Capesize rates declined today for a 17th session, the longest streak since November 2008. The capesize fleet’s carrying capacity expanded by 23 percent last year, according to an estimate by Clarkson Plc, the world’s biggest shipbroker.

Negative Rate

The lack of cargoes in the Pacific Ocean has led some shipowners to cover part of clients’ costs in an effort to hire out vessels. Costs on the C11 journey for shipments to Europe from Asia were at minus $825 a day today, compared with minus $879 yesterday. The rate went negative on Jan. 13, a first for any dry-bulk voyage reported by the exchange, which publishes daily assessments for more than 50 routes.

The vessel surplus stems from orders placed in 2007 and 2008, when daily capesize income averaged about $111,000. Rates reached a record $233,988 in June 2008 before plunging 99 percent over the next six months to $2,316 as economies entered the first global recession since World War II.

Rates to hire panamax vessels that compete with the larger capesizes for coal and iron-ore cargoes and also ship grains fell 3.5 percent to a daily $14,166 today. Supramaxes gained 0.5 percent to $15,023 and handysizes rose 0.7 percent to $11,402.

--Editors: Dan Weeks, John Deane.

Link to the original article: http://www.businessweek.com/news/2011-01-19/dry-bulk-shipping-extends-2011-drop-to-20-on-australia-floods.html

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TIP OF THE WEEK - Use the Free Google Finance Stock Screener to Find High Dividend Stocks

Use the Free Google Finance Stock Screener to Find High Dividend Stocks

Jason Brizic

Jan. 21, 2011

Google Finance has an easy to use stock screener that I use to find high dividend stocks.  Go to:

http://www.google.com/finance/stockscreener

You can select amongst three exchanges: AMEX, NASDAQ, or NYSE.  Or you can choose ALL exchanges to screen from the largest pool of stocks.  You can also filter on Sectors.  This is really useful when you are looking for a high dividend stock in a particular sector to diversify your portfolio.

It starts with four default stock screening criteria: Market capitalization, P/E ratio, Dividend yield in percentage, and 52 week price change in percentage.  There are dozens of additional criteria to choose from.  To add criteria simply click the + Add criteria text and an organized list of additional criteria will be displayed.

Each criterion has two text boxes for you to enter minimum and maximum values.  You can also move two sliders on the distribution graphics that sit in between the text boxes, but I prefer the text boxes for their precision.

I use the following criteria to quickly screen for high dividend stocks:

            Market cap -                         Min 150M (I only want stocks with a market cap over 150 million dollars)

            P/E ration -                          Max 20 (That is the absolute max I’m willing to pay - ever)

            Div yield (%) -                     Min 6 (you know I like 6% or higher)

            52 wk price change (%) -  no min or max (the bigger the loss the better for the contrarian in me)

For more tips, go here:

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