My High Dividend Stocks Blog http://myhighdividendstocks.posterous.com Most recent posts at My High Dividend Stocks Blog posterous.com Tue, 24 Jul 2012 10:37:00 -0700 The Soveriegn Debt Crisis in Europe and What It Means to Your Investments. http://myhighdividendstocks.posterous.com/the-soveriegn-debt-crisis-in-europe-and-what http://myhighdividendstocks.posterous.com/the-soveriegn-debt-crisis-in-europe-and-what

European Union bureaucrats are fessing up that the Greek government still can’t pay its bills.

http://www.marketwatch.com/story/us-stocks-fall-on-greece-debt-restructure-news-2012-07-24

This news tanked markets in the US.  Anyone who is surprised by this news has not been paying attention to the sovereign debt crisis in Europe.  This crisis is going to get worse when Greece gets bailed out for a second or third time.  Portugal, Italy, and Spain will be back for more bailouts of their own.  Where will the money come from.  The European Central Bank will print Euros.  The money will go to the Northern European banks who will be scared to lend it, so they will buy more bad debt of the PIIGS.

I would stay out of the stock market until this sovereign debt crisis has run its course.  You will know it is over when stock prices drop 40% - 60% from their May 2012 highs of about 13,000 on the Dow Jones Industrial Average.  Well run companies with fat dividend yields and decent balance sheets like Safe Bulkers (SB) can have their stock price cut from $6.00 per share down to $2.50 per share like in 2008-2009.  Safe Bulkers fell precipitously from its 2008 IPO price of $19.00 per share down to about $2.50 at the height of the financial crisis.

Image001

I’m spending my time during the sovereign debt crisis analyzing stocks to find the best ones to buy in the aftermath and at what price.  This crisis will take a long time to unravel.

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Thu, 03 May 2012 20:10:38 -0700 Shipping Industry Current Ratios and The Erosion of the Current Ratios Since the 1930's. http://myhighdividendstocks.posterous.com/shipping-industry-current-ratios-and-the-eros http://myhighdividendstocks.posterous.com/shipping-industry-current-ratios-and-the-eros

I’m always looking for high dividend stocks with earning power and strong balance sheets.  I consider a dividend yield above 6% to be a high dividend stock.  To see why read this: http://bit.ly/6percentDIV.  But don’t let that article distract you.  The focus of this article is going to be on the balance sheet measure known as the current ratio.

There are many measurements of strong balance sheets.  A company’s current ratio is one such measure of a strong balance sheet.  The current ratio is the company’s current assets (usually cash, equivalents, and accounts receivable) divided by its current liabilities (those are liabilities due within one year such as accounts payable and the current portion of the long term debt, etc.).

One of my favorite companies is Safe Bulkers (SB).  They are a dry bulk shipping company.  Unfortunately their current ratio has dropped in the last few quarters.  It currently stands a 0.73.  The father of value investing, Benjamin Graham, consider a current ratio of 2.0 the minimum for investment.  He wrote that back in his book Security Analysis in the 1930’s.  Safe Bulkers current ratio seems really low.  That made me wonder how all the other shipping companies compare.  Here is what I found:  (Note - The size of the bubbles represent the company’s market capitalization in millions of dollars.  For example, Knightsbridge Tankers has a market cap of $303 million.)

Image002

Here is a table with most of the largest publicly traded shipping companies used in the graphic above:

Company

Ticker

Market Capitalization (Millions of dollars)

Current Ratio

Dividend Yield

Kirby Corp.

(KEX)

$                          3,710

1.48

0.00%

Golar LNG Limited

(GLNG)

$                          2,920

0.41

3.13%

Teekay LNG Partners

(TGP)

$                          2,700

0.58

6.44%

Teekay Corp.

(TK)

$                          2,490

1.00

3.51%

Alexander & Baldwin

(ALEX)

$                          2,230

0.99

2.44%

Seacor Hldgs.

(CKH)

$                          1,960

2.59

0.00%

Golar LNG Partners

(GMLP)

$                          1,350

0.49

4.85%

DryShips

(DRYS)

$                          1,310

0.78

0.00%

Ship Finance Intl.

(SFL)

$                          1,060

1.11

8.85%

Seaspan Corp.

(SSW)

$                          1,030

2.74

4.30%

Navios Maritime Partners

(NMM)

$                             901

1.12

10.60%

Costamare Inc.

(CMRE)

$                             832

0.61

10.64%

Diana Shipping

(DSX)

$                             650

9.00

0.00%

Frontline Ltd.

(FRO)

$                             488

2.45

3.38%

Safe Bulkers

(SB)

$                             475

0.73

8.65%

Danaos Corp.

(DAC)

$                             444

0.40

0.00%

Navios Maritime

(NM)

$                             384

1.47

6.38%

Overseas Shipholding

(OSG)

$                             359

2.44

0.00%

Knightsbridge Tankers

(VLCCF)

$                             303

7.30

16.09%

Intl. Shipping Corp.

(ISH)

$                             150

1.30

4.88%

Box Ships

(TEU)

$                             147

0.96

13.17%

Star Bulk Carriers

(SBLK)

$                               53

0.62

6.26%

The average current ratio of the shipping industry is 1.84.  If you throw out the highest and lowest current ratios, then you get 1.56.  So the average of the industry by either measure is below what Graham considered acceptable.  That is interesting.  What was the ratio of the shipping industry in Graham’s day?  Fortunately for use he produced a gem of a table in his 1937 book Interpretation of Financial Statements which I’ve included here:  The 8 companies in shipping had an average current ratio of 3.7.

Image006

I have a sickening feeling that almost every industry nowadays will have an average current ratio below 2.0.  My hypothesis is that decades of Keynesian MBA finance grads have abandoned saving money to ensure financial resilience in a bad economy (like 2008-2009).  Keynesians hate savings because they believe that it causes consumer spending to go down and therefore the economy goes down.  If you want to learn more about this, then read Henry Hazlitt’s The Failure of the New Economics available free from www.mises.org.  He’s got a whole section on the faulty logic of Keynes’ “Paradox of Thrift”.

Subscribe for free at www.myhighdividendstocks.com/feed to discover high dividend stocks with earning power and strong balance sheets.

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Fri, 20 Apr 2012 14:46:56 -0700 TIP OF THE WEEK - What the Heck is Working Capital and Why Should You Care? http://myhighdividendstocks.posterous.com/tip-of-the-week-what-the-heck-is-working-capi http://myhighdividendstocks.posterous.com/tip-of-the-week-what-the-heck-is-working-capi

What the Heck is Working Capital and Why Should You Care?

Jason Brizic

April 20st, 2011

You need to know what working capital is because it is one of the indicators of balance sheet strength.

Follow Benjamin Graham’s advice on the importance of working capital.  The following passage comes from the 1937 book The Interpretation of Financial Statements Chapter XII:

            In studying what is called the “current position” of an enterprise, we never consider the current assets by themselves, but only in relation to the current liabilities.  The current position involves two important factors: (a) the excess of current assets over current liabilities – known as the Net Current Assets or the Working Capital, and (b) the ratio of current assets to current liabilities – known as the Current Ratio.

            The Working Capital is found by subtracting the current liabilities from the current assets.  Working Capital is a consideration of major importance in determining financial strength of an industrial enterprise, and it deserves attention also in the analysis of public utility and railroad securities.

            In the working capital is found the measure of the company’s ability to carry on its normal business comfortably and without financial stringency, to expand its operations without the need of new financing, and to meet emergencies and losses without disaster.  The investment in plant account (or fixed assets) is of little aid in meeting these demands.  Shortage of working capital, at its very least, results in slow payment of bills with attendant poor credit rating, in curtailment of operations and rejection of desirable business, and in a general inability to “turn around” and make progress.  Its more serious consequence is insolvency and the bankruptcy court.

            The proper amount of working capital required by a particular enterprise will depend upon both the amount and the character of its business.  The chief point of comparison is the amount of working capital per dollar of sales.  A company doing business for cash and enjoying a rapid turnover of inventory – for example, a chain grocery enterprise – needs a much lower working capital compared with sales than does the manufacturer of heavy machinery sold on long-term payments.

            The working capital is also studied in relation to fixed assets and to capitalization, especially the funded debt and preferred stock.  A good industrial bond or preferred stock is expected, in most cases, to be entirely covered in amount by the net current assets.  The working capital available for each share of common stock is an interesting figure in common stock analysis.  The growth or decline of the working capital position over a period of years is also worthy of the investor’s attention.

            In the field of railroads and public utilities, the working capital item is not scrutinized as carefully as in the case of industrials.  The nature of these service enterprises is such as to require relatively little investment in receivables or inventory (supplies).  It has been customary to provide for expansion by means of new financing rather than out of surplus cash.  A prosperous utility may at times permit its current liabilities to exceed its current assets, replenishing the working capital position a little later as part of its financing program.

            The careful investor, however, will prefer utility and railroad companies that consistently show a comfortable working capital situation.

Let’s take a look at Safe Bulkers (SB) working capital situation from the past few years (Source: Morningstar.com).  Safe Bulkers financial strength has been eroding along with the dry bulk shipping market.

12/2007

12/2008

12/2009

12/2010

12/2011

Total Current Assets

$98,883,000

$88,086,000

$105,648,000

$104,276,000

$37,959,000

Total Current Liabilities

$43,984,000

$70,863,000

$65,551,000

$52,983,000

$51,673,000

Working Capital

$54,899,000

$17,223,000

$40,097,000

$51,293,000

($13,714,000)

Current Ratio

2.25

1.24

1.61

1.97

0.73

Revenues

$165,848,000

$200,772,000

$164,606,000

$157,020,000

$168,908,000

WC as % of Revenue

33.1%

8.6%

24.4%

32.7%

N/A

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http://files.posterous.com/user_profile_pics/697493/v_for_vendetta_guy_fawkes_mask11.jpg http://posterous.com/users/4wuf4tt8LZzb Jason Brizic myhighdividendstocks Jason Brizic
Wed, 18 Apr 2012 14:28:41 -0700 The Interpretation of Financial Statements - Ratio Analysis using Safe Bulkes (SB) as an example http://myhighdividendstocks.posterous.com/the-interpretation-of-financial-statements-ra http://myhighdividendstocks.posterous.com/the-interpretation-of-financial-statements-ra

I recently finished reading Benjamin Graham’s 1937 classic The Interpretation of Financial Statements.  Graham explains the financial statement concepts in clear English.  At the end of the book he walks the reader through the analysis of a balance sheet and income statement using the ratio method.  His example was Bethlehem Steel Corporation.

I will do the same with Safe Bulkers (SB).

A number of the ratios used in the analysis of an industrial company’s income account and balance sheet are presented herewith by the use of a single example – namely the financial statements of the Safe Bulkers corporation for 2011.  Various items in the Balance Sheet and Income account are numbered.  This will facilitate the explanation as to the method of computing ratios.  For example margin of profit, the first ratio computed in this study, is operating income divided by sales.  On the Income Account operating income is item No. 4 and sales is item No. 1.  The method of computing margin of profit is expressed at (4) ÷

0image007
(1) or in actual amounts $108,936,000 ÷
0image007
$172,036,000 = 63.3%

SAFE BULKERS

Income Account Year Ended December 31, 2011

(1)

Revenues

$172,036,000

Commissions

(3,128,000)

(2)

Voyage, vessel operating, general and administrative expenses

(36,542,000)

Early redelivery income

207,000

(3)

Depreciation

(23,637,000)

(4)

Operating Income

$108,936,000

Add – interest, dividends, and other misc income

0

(5)

Total Income

$108,936,000

(6)

Deduct-Interest charges

(19,202,000)

(7)

Net Income

$89,734,000

(8)

Deduct-Dividends on Preferred Stock

0

(9)

Net for Common Stock

$89,734,000

Deduct-Dividends on Common Stock

$42,536,652

(10)

Transferred to Surplus

$47,197,348

BALANCE SHEET

SAFE BULKERS

December 31st, 2011

ASSETS

Current Assets:

(11)

Cash, time deposits

$28,121,000

(12)

Other current assets

9,838,000

(13)

Accounts and notes receivable

0

(14)

Inventories

0

(15)

Total Current Assets

$37,959,000

Advances for vessel acquisition and vessels under construction

$122,307,000

Restricted cash non-current

5,423,000

Long-term investment

50,000,000

Other non-current assets

6,226,000

(16)

Vessels

?

(17)

Less reserve for depreciation and depletion

0

(18)

Vessels, net

$655,356,000

Total Long Term Assets

$ 839,312,000

Total Assets

$877,271,000

LIABILITIES

Current Liabilities:

Current portion of long-term debt

$18,486,000

Other current liabilities

$33,187,000

(19)

Total Current Liabilities

$ 51,673,000

(20)

Long-term debts, net of current portion

$465,805,000

(21)

Other non-current liabilities

$27,951,000

Total Non-current Liabilities

$493,756,000

(22)

Common stock 70,894,420 shares, no par value?

0

(23)

Shareholder equity (Surplus)

$331,842,000

Total Shareholder Equity

$331,842,000

Total Liabilities

$877,271,000

Margin of Profit

Operating income divided by Sales.

Formula: (4) ÷

0image007
(1)

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Fri, 06 Apr 2012 15:32:56 -0700 TIP OF THE WEEK - Book Value or Equity and How to Calculate Book Value per Share http://myhighdividendstocks.posterous.com/tip-of-the-week-book-value-or-equity-and-how http://myhighdividendstocks.posterous.com/tip-of-the-week-book-value-or-equity-and-how

Book Value or Equity and How to Calculate Book Value per Share

Jason Brizic

April 6th, 2012

Knowing the book value of a company helps the intelligent investor to buy low.

You want to buy assets that produce profits as cheap as possible.

The following comes from Benjamin Graham’s 1937 book The Interpretation of Financial Statements.

The book value of a security is in most cases a rather artificial value.  It is assumed that if the company were to liquidate, it would receive in cash the value at which its various tangible assets are carried on the books.  Then the amounts applicable to the various securities in their due order would be their book value.  (The word “equity” is frequently used instead of book value in this sense, but it is generally applied only to common stocks and to speculative senior securities.)

As a matter of fact, if the company were actually liquidated the value of the assets would most probably be much less than their book value as shown on the balance sheet.  An appreciable loss is likely to be realized on the sale of the inventory, and a very substantial shrinkage is almost certain to be suffered in the value of the fixed assets.  In practically every case the adverse conditions which would lead to a decision to liquidate the business would also make it impossible to obtain anywhere near cost or reproduction price for the plant and machinery.

The book value really measures, therefore, not what the stockholders could get out of their business (its liquidating value), but rather what they have put into the business, including undistributed earnings.  The book value is of some importance in analysis because a very rough relationship tends to exist between the amount invested in a business and its average earnings.  It is true that in many individual cases we find companies with small asset values earning large profits, while others with large asset values earn little or nothing.  Yet in these cases some attention must be given to the book value situation, for there is always a possibility that large earnings on the invested capital may attract competition and thus prove temporary; also that large assets, not now earning profits, may later be made more productive.

CALCULATING BOOK VALUE

As has already been said, in calculating book value it is assumed that the company’s assets are worth the figure shown on the balance sheet.  Indeed, book value simply means the value as shown by the books or balance sheet.

To take a simple example, a company’s balance sheet is as follows:

Fixed Property

$1,000,000

Capital Stock

$1,700,000

Good-will

500,000

Surplus

100,000

Current Assets

500,000

Current Liabilities

200,000

$2,000,000

$2,000,000

In this case the capital stock is represented by 17,000 shares of $100 par value common stock.  To find the book value of the common stock, add the $100,000 surplus to the $1,700,000 value shown for the stock, making a total of $1,800,000.  Then look on the asset side of the balance sheet for intangibles.  You will find $500,000 good-will.  This is then deducted from the $1,800,000, leaving $1,300,000 equity available for the 17,000 common shares.  Incidentally, the figure $1,300,000 is often referred to as the “net tangible assets” of the company.  Dividing this out, the net book value per share would be $76.47.

If you had not deducted the intangibles and had simply divided the $1,800,000 by the 17,000 shares you would have found the book value per share to be $105.88.  You will not that there is quite a difference between this book value and the net book value of $76.47 a share.  If only “book value” of the stock is mentioned, tangible or net book value is usually meant.  The larger figure may be termed: “Book value, including intangibles.”

I will perform this calculation on one of my favorite high dividend stocks – Safe Bulkers (SB)

Fixed Property

$777,663,000

Capital Stock

$71,000

Intangibles

0

Additional Paid-in Capital

114,918,000

Current Assets

37,959,000

Retained Earnings

216,853,000

Other Investments

11,649,000

Current Liabilities

51,673,000

Other Long Term Assets

50,000,000

Non-current Liabilities

493,756,000

$877,271,000

$877,271,000

All of this balance sheet information is as of 4Q 2011.  Safe Bulkers has since added another 5,750,000 shares and $37,375,000 in additional paid-in capital since the 4Q 2011 report.  Safe Bulkers had 70,896,924 shares at the time of the 4Q 2011 financials report.

Safe Bulkers had $331,842,000 in book value at the end of 4Q 2011 (equity values – intangibles; highlighted in yellow above).  Divided that by 70,896,924 shares and you get a book value per share of $4.68.  That would be a very nice, low price to buy Safe Bulkers at.  Safe Bulkers sold for $3.00 - $2.50 per share at the depths of the 2009 recession.

Safe Bulkers book value per share rises to $4.82 if you include the additional paid-in capital the company raised after 4Q 2011.  This also assumes they didn’t incur any new liabilities in the meantime either.

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Fri, 09 Dec 2011 10:26:40 -0800 TIP OF THE WEEK - http://myhighdividendstocks.posterous.com/tip-of-the-week http://myhighdividendstocks.posterous.com/tip-of-the-week
Reuters.com has easy to find earnings estimates
December 9th, 2011
Jason Brizic
 
Knowing a company's earning power should help you determine when the company's shares are relatively value priced.  Companies are value priced when they are trading at less than 12 times average adjusted earnings.
 
I like to factor the current year's earnings into my long term average adjusted earnings.  I use Morninstar.com's website to gather the earnings per share, net income, and number of shares for the past five years.  That usually gets me 2006-2010.  But I still need 2011.  I switch the view from annual to quarterly to get Q1, Q2, and Q3 of the current year.  That leaves Q4 as an unknown.
 
This is where Reuters.com comes in.  I use Reuters.com to get an estimate for the next quarter to complete the year.  Its okay if a company beats or misses this estimate because it has little effect on a five or six year average adjusted earnings calculation.
 
Let's do this for one of my favorite stocks, Safe Bulkers (SB).  This data comes from Morningstar.com's financials tab.
(Earnings adjusted for changes in capitalization - Safe Bulkers has issued shares in the past two years)
Year        EPS       Net inc.       Shares      Adj EPS
2006        $1.78     $97 M         55 M         $1.47
2007        $3.84     $209 M       55 M         $3.17
2008        $2.19     $119 M       55 M         $1.81
2009        $3.03     $165 M       55 M         $2.50
2010        $1.73     $110 M       63 M         $1.67
 
For some reason unknown to me Morningstar.com wouldn't show me the quarterly data for Safe Bulkers, so I used Google Finance to find the data I need for Q1-Q3 2011
 
Year        EPS       Net inc.      Shares       Adj EPS
2011 Q1  $0.41     $27.31 M   65.88 M     $0.41
2011 Q2  $0.47     $31.13 M   65.88 M     $0.47
2011 Q3  $0.33     $22.01 M   65.88 M     $0.33
 
Click on the Analysts tab
Scroll down to Consensus Recommendations
You will see Safe Bulkers next quarter consensus estimate of $0.35 per share
 
Now we can complete the estimated earnings for 2011
Year        EPS       Net inc.      Shares      Adj EPS
2011 Q4  $0.35 E  $23.06 M   65.88 M    $0.35
 
Total        $1.56 E  $103.5 M   65.88 M   $1.56 E
 
Compute the six year average adjusted earnings, which equals $2.03 per share @ 65.88 million shares.  Safe Bulkers is trading at $6.16 as I write this, so it is only trading at 3.03 times its six year average earnings.  What a value especially with the 9.79% dividend yield.  However, its stock price will decline in a global recession and a China hard landing so I think you can get it even cheaper in the $3 - $4 range.
 
 
For more tips like these go to www.myhighdividendstocks.com/tip-of-the-week
 
 

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Mon, 24 Oct 2011 12:16:57 -0700 A Review of Safe Bulkers (SB) 3Q2011 Financials http://myhighdividendstocks.posterous.com/a-review-of-safe-bulkers-sb-3q2011-financials http://myhighdividendstocks.posterous.com/a-review-of-safe-bulkers-sb-3q2011-financials

There was nothing special or concerning in Safe Bulkers (SB) third quarter 2011 financial report.

http://www.safebulkers.com/sbpr101711.pdf

This stock is a value buy under $7.00 per share, but there is significant downside risk due to deteriorating world economic conditions.  The dry bulk shipping market has an oversupply of ships and demand for shipping services at current prices is eroding due to a worldwide recession.  I think there will be another opportunity to buy SB for $2 - $3 per share like in March 2009.

DIVIDEND RECORD

Safe Bulkers is a high dividend stock.  It is currently yielding 8.93% ($0.60 annual DIV/$6.72 share price).

Safe Bulker’s dividend record remains unchanged.  The company management will pay its 14th consecutive dividend payment since the company’s IPO in 2008.  The dividend is unchanged at $0.15 per share.  The dividend payout ratio increased to 53.5% ($0.15 DIV/$0.28 EPS) from 45.5% last quarter ($0.15 DIV/$0.33 EPS).  I will become concerned when this value goes above 80%.  There diminished earnings are more than enough to pay the dividend in the future.

EARNING POWER

Safe Bulkers’ earning power will continue to decline as the world economic recession continues.  Several of its ships will have to take extremely low charter rates in the next few quarters.  The ships at the bottom of this graph will need to find charters in the dismal spot market.  The Pedhoulas Leader, Venus Heritage, and Venus History have charters that end in October 2011.  The Andreas K and the Panayiota K have charters that end in April and May 2012 respectively.  These ships will be a drag on earnings.

Image003

Net income for the third quarter of 2011 decreased by 10% to $19.8 million from $22.0 million during the same period in 2010.  Net income for the first nine months of 2011 decreased by 16% to $66.2 million from $78.5 million during the same period in 2010.  The company’s management reported that the decrease in net income was mostly attributed to: slightly higher net revenues offset by a lower time charter equivalent (TCE) rate, higher vessel operating expenses, increased depreciation, losses on interest rate derivatives contracts, a decrease in interest expense, and some other small financial costs.  For details see their financial statement (linked above).

From Zack’s we read: Safe Bulkers (NYSE:SB - Snapshot Report) had sales growth of 1.4% during the last fiscal year. The company has reported $165.6 million in sales over the past 12 months and is expected to report $196.9 million in sales in the next fiscal year.  http://www.zacks.com/research/get_news.php?id=293l8525 .

The higher sales will come from some newbuild ships that are starting service in 2012.  Yawn!  Nothing exciting here and that’s good.  At least you can understand how Safe Bulkers earns its profits (unlike financial institutions and insurance companies).

BALANCE SHEET

Image005

Current asset decreased quite a bit.  They gained possession of the MV Venus History on September 9th, 2011.  That accounts for the gains in Vessels, net.  And they received some advances for vessel acquisition.  All that added up to a 2.9% increase in total assets.

It is nice to see Safe Bulkers paying down some of their debts.  Total liabilities at the end of December 2010 were $561.239 million.  Total liabilities have dropped to $510.035 million as of September 2011.  This improved their overall balance sheet, but they are a little strapped for cash right now.

Book value per share improved from $3.70 in December 2010 to $4.50 in September 2011.  This is a nice increase of 21.6% in book value per share.

CONCLUSION

Safe Bulkers remains a buy below $7.00.  There is downside risk due to the world economy in recession.   You will have an opportunity to buy below book value.  I’m waiting for lows like in March 2009 (approx $2.00 - $3.00 per share).  I don’t own Safe Bulkers yet.

The left side of the following chart scares me.  Nothing has been solved in the world economy.  There is another financial crisis coming.  SB’s stock price will be a victim.  That huge decline is more than enough to wipe out any high dividend gains.

Image007

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http://files.posterous.com/user_profile_pics/697493/v_for_vendetta_guy_fawkes_mask11.jpg http://posterous.com/users/4wuf4tt8LZzb Jason Brizic myhighdividendstocks Jason Brizic
Tue, 18 Oct 2011 14:31:23 -0700 Safe Bulkers (SB) reported 3Q2011 financials yesterday. It is yielding 9.13% http://myhighdividendstocks.posterous.com/safe-bulkers-sb-reported-3q2011-financials-ye http://myhighdividendstocks.posterous.com/safe-bulkers-sb-reported-3q2011-financials-ye

My current favorite high dividend stock , Safe Bulkers (SB), reported third quarter financials yesterday. 

http://www.safebulkers.com/sbpr101711.pdf

In summary, they will continue to pay their $0.15 quarterly dividend.  Safe Bulker’s dividend currently yields 9.13%.  Their dividend payout ratio remains around a conservative 50% level.  Earnings have decreased a few percentage points consistent with a horrible market in dry bulk shipping.  The balance sheet results were mixed.  Shareholder equity was up good, but current ratio and quick ratio were both down.

Image001

I will provide in-depth analysis tomorrow.

CONCLUSION – Safe Bulkers remains a buy below $7.00 per share.  However, worldwide double dip recession will take the American stock market and Safe Bulkers lower.  I think there will be opportunities to buy SB below $5.00 per share.  I’m waiting to get closer to the bottom.

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

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http://files.posterous.com/user_profile_pics/697493/v_for_vendetta_guy_fawkes_mask11.jpg http://posterous.com/users/4wuf4tt8LZzb Jason Brizic myhighdividendstocks Jason Brizic
Tue, 11 Oct 2011 13:56:14 -0700 Safe Bulkers will report 3Q2011 financials on October 17th, 2011 http://myhighdividendstocks.posterous.com/safe-bulkers-will-report-3q2011-financials-on http://myhighdividendstocks.posterous.com/safe-bulkers-will-report-3q2011-financials-on

One of my favorite high dividend stocks, Safe Bulkers (SB), will report its 3Q financials after the market closes on Monday October 17th, 2011.  Unnamed, faceless Wall Street analysts expect between $1.43 - $1.53 in earnings for 2011.  SB earned $0.41 in 1Q2011 and $0.27 in 2Q2011 for a total of $0.68 for the first six months of 2011.  Safe Bulkers needs to earn $0.38 in each of the next quarters to meet estimates.

Image004

They might meet these estimates because the Baltic Dry Index has increased slightly in 3Q2011 compared to 2Q2011.  The stock price will get hammered if the S&P turns down, the Baltic Dry Index turns down, or it the EPS numbers are below estimates.  We haven’t seen the bottom in Safe Bulkers yet.

Image005

press release

Oct. 11, 2011, 9:26 a.m. EDT

Safe Bulkers, Inc. Sets Date for Third Quarter 2011 Results, Dividend Announcement, Conference Call and Webcast

Earnings Release: Monday, October 17, 2011, After Market Closes; Conference Call and Webcast: Tuesday, October 18, 2011 at 09:00 A.M. EDT

Image001

ATHENS, GREECE, Oct 11, 2011 (MARKETWIRE via COMTEX) -- Safe Bulkers, Inc. (the Company) /quotes/zigman/512899/quotes/nls/sb SB +2.21% , an international provider of marine drybulk transportation services, announced today that it will release its results for the quarter ended September 30, 2011 after the market closes in New York on Monday, October 17, 2011. The Company also expects to announce the declaration of a dividend for the third quarter 2011 at that time.

On Tuesday, October 18, 2011 at 9:00 A.M. EDT, the Company's management team will host a conference call to discuss the financial results.

Conference Call details: 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 October 25, 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 to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

About Safe Bulkers, Inc. The Company is an international provider of marine drybulk transportation services, transporting bulk cargoes, particularly coal, grain and iron ore, along worldwide shipping routes for some of the world's largest users of marine drybulk transportation services. The Company's common stock is listed on the NYSE, where it trades under the symbol "SB." The Company's current fleet consists of 17 drybulk vessels, all built post-2003, and the Company has contracted to acquire 10 additional drybulk newbuild vessels to be delivered at various times through 2014.

Link to original press release: http://www.marketwatch.com/story/safe-bulkers-inc-sets-date-for-third-quarter-2011-results-dividend-announcement-conference-call-and-webcast-2011-10-11?reflink=MW_news_stmp

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http://files.posterous.com/user_profile_pics/697493/v_for_vendetta_guy_fawkes_mask11.jpg http://posterous.com/users/4wuf4tt8LZzb Jason Brizic myhighdividendstocks Jason Brizic
Fri, 07 Oct 2011 14:25:46 -0700 Safe Bulkers, Inc. Announces a Two-Year Time Charter With a Forward Delivery Date for a Kamsarmax Newbuild Vessel at $13,250 Gross Daily Rate http://myhighdividendstocks.posterous.com/safe-bulkers-inc-announces-a-two-year-time-ch http://myhighdividendstocks.posterous.com/safe-bulkers-inc-announces-a-two-year-time-ch

Safe Bulkers, Inc. Announces a Two-Year Time Charter With a Forward Delivery Date for a Kamsarmax Newbuild Vessel at $13,250 Gross Daily Rate

Image001

ATHENS, GREECE, Oct 07, 2011 (MARKETWIRE via COMTEX) -- Safe Bulkers, Inc. (the "Company") /quotes/zigman/512899/quotes/nls/sb SB -2.74% , announced today that it has entered into a new period time charter for a 82,000 dwt, Chinese built, Kamsarmax class vessel, for a duration of 24 to 27 months, with a forward delivery date within the second or the third quarter of 2012, at a gross daily charter rate of $13,250, less 4.75% total commissions. The charter is expected to commence upon delivery from the shipyard.

As of today, the contracted employment of fleet ownership days for the full year 2011, 2012 and 2013 is 94%, 64% and 57% respectively. Contracted employment includes vessels which are scheduled to be delivered to us in the future.

Dr. Loukas Barmparis, President of the Company, said: "The new two-year time charter secures employment for one of our Chinese newbuild Kamsarmax class vessels and expands our charter coverage for the coming two years."

Link to original press release: http://www.marketwatch.com/story/safe-bulkers-inc-announces-a-two-year-time-charter-with-a-forward-delivery-date-for-a-kamsarmax-newbuild-vessel-at-13250-gross-daily-rate-2011-10-07?reflink=MW_news_stmp

That is really cheap.  Most of their ships are rented out for between $20,000 and $24,000 per day.  It was a wise move to lock in this ship for two years because of the coming worldwide recession that will hit the dry bulk shipping rates harder than the present.

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http://files.posterous.com/user_profile_pics/697493/v_for_vendetta_guy_fawkes_mask11.jpg http://posterous.com/users/4wuf4tt8LZzb Jason Brizic myhighdividendstocks Jason Brizic
Mon, 03 Oct 2011 23:59:39 -0700 Don't buy Safe Bulkers yet even though it is below $7.00 http://myhighdividendstocks.posterous.com/dont-buy-safe-bulkers-yet-even-though-it-is-b http://myhighdividendstocks.posterous.com/dont-buy-safe-bulkers-yet-even-though-it-is-b
Safe Bulkers has been absolutely hammered since April of 2011, but don't buy it yet.  I know it is in value territory right now.  But trust me...it will go lower with the world economy because dry bulk shipping rates are affected by the world economy.  Wait until the technicals show a bottom for this excellent dividend company.
 
You can read all my articles on Safe Bulkers fundamentals by clicking on this link: http://www.myhighdividendstocks.com/category/high-dividend-stocks/sb
 
 
Here is the link to the SB chart if it doesn't appear above: http://stockcharts.com/h-sc/ui?s=SB&p=W&b=5&g=0&id=p02710131286
 
The technicals I'm looking for are the CCI coming out of the red zone, the price lifting off the lower Bollinger Band, and the MACD turning upward.
 
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http://files.posterous.com/user_profile_pics/697493/v_for_vendetta_guy_fawkes_mask11.jpg http://posterous.com/users/4wuf4tt8LZzb Jason Brizic myhighdividendstocks Jason Brizic
Tue, 23 Aug 2011 15:01:38 -0700 Safe Bulkers on sale, but wait for the bottom. http://myhighdividendstocks.posterous.com/safe-bulkers-on-sale-but-wait-for-the-bottom http://myhighdividendstocks.posterous.com/safe-bulkers-on-sale-but-wait-for-the-bottom
 
It suggest that the recent 16% in the Baltic Dry Index is forecasting improvement to worldwide economic conditions.  This is nothing but Keynesian wishful thinking.  Government debt crises all over the world coupled with very high unemployment and massive quantities of fiat money printing will sink economies from here.  I like Safe Bulkers, but you will be able to buy it much cheaper than today.
 
It isn't done going down.
 
 
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http://files.posterous.com/user_profile_pics/697493/v_for_vendetta_guy_fawkes_mask11.jpg http://posterous.com/users/4wuf4tt8LZzb Jason Brizic myhighdividendstocks Jason Brizic
Wed, 17 Aug 2011 15:19:44 -0700 An opportunity to pick up Safebulkers (SB) below $7.00 per share (9.6% dividend yield) will come again. http://myhighdividendstocks.posterous.com/an-opportunity-to-pick-up-safebulkers-sb-belo http://myhighdividendstocks.posterous.com/an-opportunity-to-pick-up-safebulkers-sb-belo
You had your chance to buy Safebulkers (SB) below $7.00 like I recommended: http://www.myhighdividendstocks.com/category/high-dividend-stocks/sb 
 
SB has gained 21% ($6.20 to $7.56) since its 52 week bottom on August 8th, 2011.  Safebulkers was yielding 9.6% at the bottom also.  It didn't expect you to buy at the exact bottom.  If you used my combination of technical indicators: CCI, Bollinger Bands, and MACD then you would have bought on August 14th or 15th at around $7.00 per share.
 
Disclosure: I don't own Safebulkers yet because I'm paying down some debts.  That is using all my free cash flow, but it pains me to miss this opportunity.  I believe that the next crash of the stock market will take Safebulkers down with it and present more buying opportunities.
 
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Mon, 25 Jul 2011 11:44:23 -0700 Analysis of Safe Bulkers (SB) 2nd Quarter Results http://myhighdividendstocks.posterous.com/analysis-of-safe-bulkers-sb-2nd-quarter-resul http://myhighdividendstocks.posterous.com/analysis-of-safe-bulkers-sb-2nd-quarter-resul

Safe Bulkers (SB) reported 2nd quarter financial results on Thursday July 21st, 2011.  Their board of directors declared a continuation of the $0.15 quarterly dividend.

http://bit.ly/SB2Q2011report 

The dividend is payable on or about August 31st, 2011 to shareholders of record at the close of trading of Safe Bulkers common stock on the NYSE on August 24th, 2011. Safe Bulkers has paid a $0.15 quarterly dividend since it's 2008 public offering.  They haven't established themselves as dividend growers, but the dividend yield of 8.3% is tremendous ($0.60 annual dividend / $7.21 share price).

Safe Bulkers dividend is still safe even in this horrible drybulk shipping market brought on by the global recession created by Keynesian central bank monetary expansion.  SB earned $0.27 per share this quarter and paid a $0.15 dividend.  The dividend payout ratio rose to 55.5% from 38.7% in 2010.  I don't like to see the dividend payout ratio to rise unless the dividend is increased.  But this increase in the dividend payout wouldn't worry me until it approaches 90%.  SB paid the same $0.60 annual dividend while earning an adjusted $1.55 in 2010.  The company conducted a 5 million share equity offering since 2010, so the $1.73 2010 EPS needed to be adjusted downward.

This year's annual earnings are on pace to be the lowest in the history of the company.  Safe Bulkers has earned an average of $1.90 per share over the past five years (adjusted for changes in capitalization due to share increases).  SB earned $0.41 in the first quarter of 2011.  It earned $0.27 this quarter.  Some faceless, nameless analysts expected earnings of $0.37 per share according to Reuters financial website.  Therefore, the financial press considered this quarter a earnings miss.  Let's assume that SB only earns 90% of it's 2nd quarter earnings in the 3rd and 4th quarters.    With these conservative assumptions the company would earn $1.16 per share.  This would bring the six year average EPS (adjusted) down to $1.84.  Safe Bulkers remains an extreme value stock trading at 3.92 average earnings including my hypothetical earnings estimates for the remainder of the year.  Consider buying SB below $22.08 per share (12 times average adjusted earnings).  Consider selling SB above $36.80 (20 times average adjusted earnings).  This high dividend stock is so cheap compared to other stocks!!

Coca-Cola (KO) trades at around 26 times average earnings.
Pfizer (PFE) trades at around 18.2 times average earnings.
Proctor & Gamble (PG) trades at around 16 times average earnings.

Safe Bulkers has 16 ships in it's operational fleet.  The fleet's average age is 4.4 years.  There are another 11 that will be added to the fleet over the next three years.  The company's average time charter equivalent (TCE) rate (think of as revenue per ship per day) was $27,921 in this quarter.  Estimated 2011 revenue = 16 ships x 361 operational days (99%) x $28,000 TCE = $160 million.  Only 23% of the fleet is rented out on the abysmal spot dry bulk market characterized by the Baltic Dry Index.  So only a small portion of SB's revenues are affected by the current market. Their fleet is contracted out at 59% in 2012 including the new ships joining the fleet.  If you are considering a purchase of Safe Bulkers, then you must monitor the Baltic Dry Index weekly (note: the BDI has taken a huge hit in the past three years due to the massive drop in the capesize rental prices.  Capesizes are the biggest ships.  SB owns very few of them, so the BDI can lose a larger percentage than SB's TCE in the same amount of time.)

Balance sheet (improving slightly)
Shareholder equity increased by $65.6 million.  Nearly $40 million of the additional equity came from the equity offering.

Companies with current ratios above 2.0 and a quick ratio above 1.0 are usually financially sound.  They have enough current assets to cover their current liabilities more the twice over.  The quick ratio measures cash on hand divided by current liabilities.  SB's current ratio dropped from 2.0 to 0.62 and their quick ratio dropped from 1.9 to 0.5.  The company's current ratio and quick ratio decreased due to spending money on advances to shipyards building their new ships.  These ratios should increase back to excellent levels once the new ships start producing revenues.

Conclusion: Safe Bulkers earnings miss will create an opportunity for high dividend stock investors who have done there homework to buy this excellent company at a low price.

Disclosure: I don't own Safe Bulkers, but I would like to.

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Tue, 19 Jul 2011 13:19:49 -0700 Safe Bulkers (SB) edges closer to a value buy opportunity http://myhighdividendstocks.posterous.com/safe-bulkers-sb-edges-closer-to-a-value-buy-o http://myhighdividendstocks.posterous.com/safe-bulkers-sb-edges-closer-to-a-value-buy-o

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.

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http://bit.ly/BDI2yearChart

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.

Image005

http://bit.ly/SB2yearChart

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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http://files.posterous.com/user_profile_pics/697493/v_for_vendetta_guy_fawkes_mask11.jpg http://posterous.com/users/4wuf4tt8LZzb Jason Brizic myhighdividendstocks Jason Brizic
Fri, 15 Jul 2011 18:41:54 -0700 Safe Bulkers (SB) will report 2nd quarter results on July 21st. http://myhighdividendstocks.posterous.com/safe-bulkers-sb-will-report-2nd-quarter-resul http://myhighdividendstocks.posterous.com/safe-bulkers-sb-will-report-2nd-quarter-resul 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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Thu, 14 Jul 2011 14:48:11 -0700 Safe Bulkers (SB) is smart to buy ships at deep discounts. Now that's capitalism. http://myhighdividendstocks.posterous.com/safe-bulkers-sb-is-smart-to-buy-ships-at-deep http://myhighdividendstocks.posterous.com/safe-bulkers-sb-is-smart-to-buy-ships-at-deep

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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Fri, 08 Jul 2011 11:28:01 -0700 TIP OF THE WEEK - The Usefulness of Bollinger Bands http://myhighdividendstocks.posterous.com/tip-of-the-week-the-usefulness-of-bollinger-b http://myhighdividendstocks.posterous.com/tip-of-the-week-the-usefulness-of-bollinger-b

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

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http://files.posterous.com/user_profile_pics/697493/v_for_vendetta_guy_fawkes_mask11.jpg http://posterous.com/users/4wuf4tt8LZzb Jason Brizic myhighdividendstocks Jason Brizic
Thu, 07 Jul 2011 15:02:01 -0700 DryShips (DRYS) earns an upgrade. Why? http://myhighdividendstocks.posterous.com/dryships-drys-earns-an-upgrade-why http://myhighdividendstocks.posterous.com/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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http://files.posterous.com/user_profile_pics/697493/v_for_vendetta_guy_fawkes_mask11.jpg http://posterous.com/users/4wuf4tt8LZzb Jason Brizic myhighdividendstocks Jason Brizic
Thu, 09 Jun 2011 17:23:45 -0700 Are you missing out on a 8.47 dividend yielder near it 52 week low? http://myhighdividendstocks.posterous.com/are-you-missing-out-on-a-847-dividend-yielder http://myhighdividendstocks.posterous.com/are-you-missing-out-on-a-847-dividend-yielder
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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Be seeing you!

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http://files.posterous.com/user_profile_pics/697493/v_for_vendetta_guy_fawkes_mask11.jpg http://posterous.com/users/4wuf4tt8LZzb Jason Brizic myhighdividendstocks Jason Brizic