Safe Bulkers: 8% Yielder That Looks Quite Appealing On The Surface

Safe Bulkers (NYSE: SB) provides marine drybulk transportation services worldwide. Distributing 8% a year and currently undervalued, I believe that this name will, a priori, please investors. However, in my view, the fact that the company’s Board of Directors is not independent and the future contractual obligations make the investment very risky. In this piece, I will provide more details.

Source: safebulkers.com
Business Incorporated in the Marshall Islands and headquartered in Monaco, Safe Bulkers Inc. through its subsidiaries provides marine drybulk transportation services, transporting bulk cargoes with coal, grain, and iron ore.

Source: Form 20-F
Owning, as of May 24, 2018, 39 drybulk vessels, with an average age of 7.9 years and carrying capacity of 3,513,800 million dwt, Safe Bulkers seems like a solid company with an established business model. For interested readers, the following is a list of all the company’s vessels with more details:

Source: safebulkers.com
While revenues seem concentrated on a few customers, I appreciate that they are large corporations. SB works with large operators like ArcelorMittal (NYSE: MT) or Glencore (OTCPK: GLCNF). The following lines are a good read:

Source: Form 20-F
As of December 31, 2017, approximately 797 people worked on board the vessels in the fleet, and 96 people worked on shore:

Source: Form 20-F
The management works in an office located in Monaco... Read more

Older articles featuring SB: