IN THE BACK
Lifting all boats
IFSL Marlborough Multi Cap Income ’ s Siddarth Chand Lall highlights three shipping companies that pay healthy dividends and are well positioned for growth
The end of the pandemic drove a spike in profits for shipping companies , as economies re-opened and businesses found themselves competing for cargo space . Port congestion caused by China ’ s lockdown policies drove up freight charges further , as did western sanctions on Russian oil & gas exports , with increased demand for tankers that transport fuel . Freight rates are now starting to normalise , but we expect them to settle higher than their pre-Covid level . While the macroeconomic backdrop remains uncertain , many shipping companies look well placed to navigate a global slowdown .
Clarksons is a market leader in shipbroking – matching ships with cargoes , or buyers with sellers of vessels . Higher freight rates and a global shortage of vessels have driven record revenues and profits . Clarksons is also a significant US dollar earner , which helps when the pound is relatively weak . The company has net cash on the balance sheet and a dividend yield of around 3.3 %. It has a strong culture of returning profits to investors and has increased dividends for 20 consecutive years , raising the most recent interim dividend by more than 7 %. Clarksons is trading on a P / E multiple of around 13.5x 2022 earnings .
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