3 dividend stocks from an interesting sector that offers huge potential but also risk
Shipping is a sector that has much to offer investors. Among other things, it often offers a high dividend and, along with it, great growth. But again, all is not so rosy. The sector has one big catch.
Shipping
The shipping sector is characterised by high volatility and cyclicality, which is linked to globalisation trends and the economic cycle. Ships are significantly capital-intensive machines that have a long payback period.
Ships have a high level of fixed and operating costs, which significantly affects profitability. On the revenue side, shipping companies are dependent on a small number of large customers and have to face intense competition in the market. The share price of these companies is affected by their strong dependence on the price of oil or the demand in the market for containers and other transport services.
A period of a growing world economy brings shipping companies revenue growth from higher tariffs, while a recession pushes them to cut costs, which is difficult to…
The only thing that bothers me is that it's a cyclical sector. I like the miners here better than the shippers.
This sector went by me for now, but added to the watchlist.
I'm fascinated by the low PEs. Which is your favorite of these three? I'm intrigued by Genco with its rapid debt reduction.
How about $ZIM?