Profitable Despite The Trade Wars: A 10.4% Yield From Safe Bulkers Preferred

Panic about a potential recession and Chinese trade war have caused investors to dump shipping stocks. Despite these fears, Q3 economic growth was a very robust 3.5%. Dry bulk shipping rates as measured by the Baltic Dry Index are now at 1,271. That is a level where Safe Bulkers Inc. (SB) will continue to be profitable. In fact, the BDI has rallied back nicely since it bottomed near 1,000 in November. SB felt confident enough to institute a share buyback. Dry bulk shipping peer Diana Shipping Inc. (DSX) just completed a $15 million share buyback. Peer Star Bulk Carriers Corp. (SBLK) has also been actively buying its own shares. Dry bulk shipping stocks remain very depressed even though the fundamentals are actually quite good.
Has the shipping panic has created some great opportunities for income investors? SB.PD now offers a well-covered 10.4% yield with the potential for substantial capital gains if sentiment becomes more positive. This article covers the top 10 reasons why high-yield investors should consider Safe Bulkers Inc. 8% Cum Red Perp Pfd Shs Series D (SB.PD) as well as the major risks.
What is SB.PD? SB.PD is a par $25 cumulative preferred issue with an 8% coupon. Dividends are paid quarterly, and SB.PD now yields 10.2% at a recent price of $19.20. SB.PD is a perpetual issue, which means that the company is not required to call it. The company has the option to call SB.PD at par any time after 6/30/2019. See prospectus for additional details. Average daily trading... Read more