A dividend of 27.6% would indeed catch my eye too. Too bad that we
just missed the Sept. 1 ex-dividend date . . .
The problem here is that the Yahoo information appears to be
incorrect. It shows a forward annual dividend of $12.90 and a
trailing dividend of $22.19. But according to the Wall Street Journal
online (a subscription service), Frontline just announced a $2
dividend on its NYSE shares. Paid quarterly, that would be $8 per
year ? still not a bad return on a $45 stock.
Let?s look at the dividend history from the investor relations pages
of the oil tanker company:
?Dividend Policy & History?
FY2005 (2 quarters): $5.10
Frontline is a tanker company, operating in spot markets where demand
for oil can push lease rates up for tankers and make them very
profitable. That?s what has happened since 2002. However, even then
the company?s cash flow has been negative, as its own pages indicate:
Revenues have tripled for the company since 2002, from $551.6 million
to $1.855.6 million and pushed the company from a loss to a net income
of $1,023.4 million or $13.79 per share. Still, the company paid out
$1,040.1 million in dividends ? only slightly less than cash provided
In fact, the cash flow statement shows that total cash flow for the
company last year was slightly negative, with cash used at $1,103
million ? so it DOESN?T have positive cash flow. However, continued
strong rates for tankers clearly have investors believing dividends
should stay attractive.
There?s an excellent company analysis of market conditions, made to
analysts within the last 2 weeks here:
?Interim Results for the Quarter ended June 30, 2005?