by Robert Hauver
One of our favorite high dividend stocks, Seaspan, (SSW), just issued a new “E” series Preferred stock, which pays 8.25% per annum, via quarterly dividends. We’ve owned SSW and its various preferred shares off and on through the years, and we’ve had very good results with both the common and the preferred.
In particular, SSW’s preferred shares have been a very reliable dividend income source, and they’ve also been pretty resilient to market pullbacks. We list both the new E series preferred, (SSW-E), and SSW in our High Dividend Stocks By Sector Tables Industrials section.
Company Profile: Seaspan provides many of the world’s major shipping lines with outsourcing alternatives to vessel ownership by offering long-term leases on large, modern containerships combined with industry leading ship management services.
Seaspan’s managed fleet consists of 105 containerships, representing a total capacity of over 800,000 TEU, including 32 newbuilding containerships on order scheduled for delivery to Seaspan and third parties by the end of 2016.
Seaspan’s current operating fleet of 71 vessels has an average age of approximately seven years and an average remaining lease period of approximately five years. SSW’s long-term lease business model affords it stable cash flow, with which to pay dividends.
Preferred & Common Dividends:
Buying newly issued preferred shares often offers the retail investor a chance to buy shares below or near the liquidation, par value.
Why is this important? Because, when and if the shares get called in by the issuing company, you’ll also realize a capital gain, if you bought them below the par value. In this case, though, since these shares are cumulative, AND aren’t callable by Seaspan until 2019, so you’ll have ample time, 5 years, to collect around $10.31 in quarterly dividends, and bring your breakeven way below the $25.00 par value.
These shares just started trading on 2/10/14, and are trading right around par. Like many preferred shares, the various websites often show a different ticker symbol for this stock.
The 1st ex-dividend date should be around 4/27/14:
SSW also has a good dividend yield on its common shares:
If you’re interested in more immediate income, there’s an attractive covered calls trade for SSW, which expires in August 2014. The at-the-money, August $22.50 call options are currently paying 2 times the amount of SSW’s next 2 quarterly dividends.
You can see more info on this and over 30 other covered call trades in our free Covered Calls Table.
The $22.50 strike price is also $.38 above SSW’s $22.12 price, so it offers a small capital gain opportunity as well:
We haven’t added any put trades for SSW to our Cash Secured Puts Table as of yet, since its puts aren’t yielding very much currently.
Author: Robert Hauver,copyright 2014 DeMar Marketing, All Rights Reserved.
Disclosure: Author owned shares of SSW and SSW-E at the time of this writing.
Disclaimer: This article was written for informational purposes only. Author not responsible for any errors, omissions, or actions taken by third parties as a result of reading this article.