- Supply side fundamentals support high yields.
- Recent asset sales above carrying value.
It’s not often that you can lock into a hefty 9 per cent dividend yield from a company that has delivered a 100 per cent NAV total return over the past five years. It is even more unusual that the company in question is trading on a 26 per cent discount to book value even though it is selling off 10 per cent of its assets at a premium to NAV and plans to return the cash to shareholders. This is the compelling proposition a below the radar fund focussed on shipping offers investors.
NAV per share is clearly on an upwards trajectory, as seen in the final quarter when it rose by 5.1 per cent (after payment of the quarterly dividend). A continuation of this trend, helped by the unwinding of negative charter values, is highly supportive of the share price as it will still capture three quarters of the incremental rise in NAV per share even if the level of the share price discount to NAV remains unchanged.
