Why do dividends in this sector sometimes reach up to 70%?

High dividends are tempting. But what if they are so high that a warning light goes off for everyone? Are these staggering numbers even realistic and sustainable anymore?

The shipping sector is perhaps a little more complicated at first glance, so to understand high dividends, we must first look at how the sector itself works.

The shipping sector works on the principle of transporting cargo by sea using ocean-going ships. There are two basic ways in which this activity works:

Carriers - These are companies that own their own fleet of ships. They are in charge of operating, maintaining and managing these ships and arranging the transportation of cargo for their clients. They collect fre ight rates for each cargo shipment. Their profits thus depend directly on the occupancy of their ships.

Shipping companies (shipowners) - They own fleets of ships, but instead of operating them, they provide them 'for hire' through sea charters. The owning company does not provide transport. What is…

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Thanks for the description, I have personally seen them shipping companies, mostly $ZIM, however it is the high dividend that makes it tempting, but also a question mark. I'm not investing yet, I'm thinking maybe in the future when maybe the price drops a bit more, as it's probably not a good period for the aforementioned $ZIM right now.

Interesting, thanks. But then why don't we all have our entire portfolio in just these companies? What's the problem with buying it on the last day before the dividend and then selling it immediately? 😀

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