The marine shipping industry can be volatile. However many of the companies in this group offer steadier big-dividend preferred shares (that can appeal to income-focused investors). In this report, we review a company that offers seaborne crude oil and petroleum product transportation services worldwide, including its attractive qualities and current risks, and with a special focus on its 9.6% yield preferred shares. We conclude with our strong opinion on investing.
Tsakos Preferreds: Despite Risks, Attractive +10% Dividend Yield, Capital Appreciation Potential
If you are an income-focused investor, these preferred shares are worth considering. Despite the risks (such as a high debt load, a growing amount of preferred share dividend payments, significant fleet depreciation and the first decrease in oil demand since 2009), there are reasons to believe this investment opportunity is very attractive. For example, the company has historically navigated through many crisis situations, thanks in large part to its fixed-rate chartering policy. Further, the company has a diversified fleet and a consistently improving debt profile (albeit with growing preferreds). Further still, efforts to improve the common stock’s price (via a reverse stock split), the expected recovery in charter rates (from an anticipated oil demand rebound in 2021) and a possible tanker supply imbalance (created by the implementation of IMO regulations), all bode well. Overall, we like the deeply discounted price on the preferred shares, especially considering the big stable dividend payments to investors.