Adventurous: Diana Containerships
If you’re in the market for high adventure, look no further than the high seas. Shipping companies have been tempest-tossed in the past couple of years. Diana Containerships (NASDAQ:DCIX), which leases container vessels, has managed to pick up some sweet deals as new ships entering service, low freight rates and weaker economic growth have created rough sailing for the sector.
The first thing you notice about Diana Containerships is its white-hot current dividend yield of 21.5%. But while the company’s recent sale of its Maersk Madrid Panamax ship for scrap netted $8.8 million to help cover the dividend, weak freight markets forced the company to dispose of that asset prematurely. Also, the company’s year-over-year EPS is expected to decline nearly 80% as existing sale/lease back charter rates expire.
I consider DCIX to be a “mad money” stock for investors who believe a 30-month trend of laggardly dry bulk shipping rates is bound to turn around at some point.
But caveat emptor: This sky-high yield is anything but safe.