The shipping industry suffered a severe setback amid the COVID-19 pandemic. The congestion at ports continues to worry investors, and according to a Forbes report, shipping bottlenecks could last well into 2022. However, conditions are also leading to a rise in shipping rates, which is benefitting shipping stocks.

Furthermore, according to a Research and Markets report, the global shipping container market is expected to reach $14.88 billion in 2021. It is further expected to grow at a 6% CAGR to $20.02 billion by 2026. In addition, in the wake of the pandemic disruptions, many companies have resumed paying dividends. According to a Reuters analysis of Refinitiv data, for major companies with a market capitalization of at least $1 billion, total pay-outs to shareholders are estimated to be $1.37 trillion in 2021.

Therefore, we think high dividend-yielding and quality shipping stocks ZIM Integrated Shipping Services Ltd. (ZIM) and Eagle Bulk Shipping Inc. (EGLE) could be solid bets now.

ZIM Integrated Shipping Services Ltd. (ZIM)

Based in Haifa, Israel, ZIM and its subsidiaries provide container shipping and related services in Israel and internationally. The company also provides both seaborne transportation and logistics services. In addition, it currently operates a fleet of 101 vessels.

On October 21, 2021, ZIM announced that during October 2021, it purchased seven second-hand vessels (built between 2007-2009) in several separate transactions. This is expected to expand the company’s portfolio.  

ZIM’s annual $10 dividend translates to a 17.54%  dividend yield. Its four-year average dividend yield is 1.21%. On November 17, 2021, Eli Glickman, ZIM’s President & CEO, said, “Accordingly, we will be paying in December 2021 a $2.50 per share interim dividend for the third quarter, representing approximately 20% of quarterly net income.”

ZIM’s income from voyages and related services increased 209.7% year-over-year to $3.14 billion for the third quarter, ended September 30, 2021. Its gross profit increased 742% year-over-year to $1.91 billion. Its profit for the period came in at $1.46 billion, up 913.1% year-over-year. Furthermore, its EPS came in at $12.16, up 794.1% year-over-year.

Analysts expect ZIM’s revenue to increase 154.3% year-over-year to $10.15 billion in its fiscal year 2021. Its EPS is expected to grow 546.8% year-over-year to $32.47 in the current year. In addition, it surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 173.3% in price to close yesterday’s trading session at $57.

ZIM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

ZIM has a B grade for Growth, Value, Quality, and Momentum. Within the Shipping industry, it is ranked #6 of 46 stocks. Click here to see the additional POWR Ratings for Stability and Sentiment for ZIM.

Eagle Bulk Shipping Inc. (EGLE)

EGLE, in Stamford Conn., engages in the ocean transportation of dry bulk cargoes worldwide. The company owns, charters, operates dry bulk vessels, and serves miners, producers, traders, and end-users. Currently, it operates a fleet of 45 vessels.

On November 4, 2021, Eagle’s CEO Gary Vogel said, “Drybulk freight rates continued to strengthen in the third quarter, and Eagle’s strong leverage to the market produced $78 million of net income for the quarter. Not only does this represent the highest quarterly net income Eagle has achieved, it also eclipses the company’s best ever annual result!”

EGLE’s current dividend translates to a 20.64% yield. The company is expected to pay a $2 per share quarterly dividend on November 24. For its fiscal third quarter, ended September 30, 2021, its net revenue increased 169% year-over-year to $183.39 million. Its net income came in at $78.34 million compared to a  $11.16 million loss. Also, its EPS came in at $4.92, compared to a $1.09 loss. EGLE’s revenue is expected to be $483.56 million in its fiscal year 2021, representing a 75.8% year-over-year rise. The company’s EPS is expected to increase 586.8% year-over-year to $16.55 in the current year. Over the past year, the stock has gained 128.4% in price to close yesterday’s trading session at $38.76.

It is no surprise that EGLE has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Growth, and a B grade for Value and Momentum.

EGLE is ranked #14 in the the Shipping  industry. Click here to see the additional POWR Ratings for EGLE (Quality, Stability, and Sentiment).

ZIM shares were trading at $55.53 per share on Tuesday afternoon, down $1.47 (-2.58%). Year-to-date, ZIM has gained 382.87%, versus a 25.80% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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