Shipping is still a mess. Tanker rates have picked up a little bit and dry bulk rates seem to have at least leveled off, but overall rates are still not very good. That presents a fairly uninspiring backdrop for Ship Finance (NYSE:SFL), one of the world's largest tanker fleet owners. Although Ship Finance seems built to last, investors may wonder if the risk of further worsening conditions and/or a dividend cut is worth the potential of a sector recovery and the above-average dividend yield.
Restructured Deal with Frontline was a Must
Ship Finance does not operate the ships it owns, instead it charters them out to operators on long-term contracts. Unfortunately, a very large percentage of the firm's ships (and nearly all of its oil tankers) are chartered to
Frontline (NYSE:
FRO), the recently-struggling shipping firm controlled by John Fredriksen. For related reading, see
Play the Bottom in Shipping.
Read the full piece here:
http://stocks.investopedia.com/stock-analysis/2012/Ship-Finance-Has-The-Hatches-Battened-Down-SFL-FRO-SDRL-CMRE-TEU0316.aspx
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