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.
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.
The Baltic Dry Index tracks the spot market dry bulk shipping rental rates. The BDI has barely recovered from its January 2011 bottom.
http://bloom.bg/BDI_moves_lower
Traders/investors use the BDI as a barometer of global trade. A lower BDI equates to a double dip recession in their minds. Further erosion of the spot market will cause investors to sell dry bulk shipping stocks. This will provide an opportunity to buy high dividend stocks like Safe Bulkers (SB) at a lower price.
Consider buying Safe Bulkers at or below $7.00. Most of Safe Bulkers 16 ships are not contracted in the spot market. They are in long term contracts between $20,000 and $30,000 per day.
Please follow this link if you want to read my analysis in support of Safe Bulkers as a best dividend stock: http://bit.ly/SafeBulkers Those articles cover its dividend record, earnings power, and its balance sheet.
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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 |
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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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:
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:
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:
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.
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
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
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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