Supply chains are opportunities for investors.
In the e-commerce age, consumers would be forgiven for thinking goods magically appear on their doorstep at the click of a button. But the realities of international logistics are actually complex. The behind-the-scenes companies that do this shipping often are overlooked amid the high-growth alternatives in technology or biopharmaceuticals. As the global economy continues to grow, these shipping stocks are well-positioned to profit. Best of all, many shipping companies are committed to sharing those profits with shareholders through dividends. Here are seven shipping stocks for investors interested in targeting economic growth and generating income.
Seaspan Corp. (ticker: SSW)
Seaspan manages almost 100 container ships based in Hong Kong but serving the world. Its proximity to Asia makes it a key player in the region’s exports — and even if there is talk of a trade war between China and the U.S., the brisk business with the rest of the world should provide a nice hedge for investors worried about politics. The stock has been publicly traded in the U.S. for less than a year, however this $1 billion shipping company is worth a look for anyone who wants to generate income off cyclical investments.
Current yield: 5.7 percent
Ship Finance International Ltd. (SFL)
An interesting twist on the stocks doing the actual transportation is Ship Finance, a company that specializes in the big-ticket deals necessary to build and maintain a fleet of cargo or tanker ships. This puts the firm positioned to profit from brisk shipping and economic trends as demand picks up and companies spend more on their fleets. It takes a while to build and deploy new ships, but SFL is already seeing its financing activities pick up with 10 percent revenue growth expected in fiscal 2018.
Current yield: 9.5 percent
Ryder System (R)
Many Americans will recognize the Ryder brand from its yellow truck fleet in years past. The color scheme was changed to white in 2018, and the company itself has undergone a transformation to focus on supply chain logistics as well as rental trucks. That means R stock is more dependent on small- and mid-sized companies that rent big rigs and pay for shipping services than just regular folks looking to move into a new house. Ryder is a great pick to consider in a cyclical upturn for the economy when businesses are growing and shipping more goods.
Current yield: 2.8 percent
Union Pacific Corp. (UNP)
An obvious play on broad economic strength and continued movement of goods is railroad stocks. While trucks take products on the “last mile,” as logistics experts call it, the earliest links in the supply chain rely heavily on railroads. Sure, it may seem like an old-school investment given rail’s founding in the 1860s. But the bottom line is that there is no more efficient way to distribute physical objects across the nation. And given the lack of competition and established service area of UNP, it’s easy to see this company as a reliable source of dividends.
Current yield: 2.1 percent
Copa Holdings SA (CPA)
A bit of an international twist, Copa is an airline serving South America. That means it moves people and goods in this region, making it a key player in any future economic growth. While emerging markets have been volatile for a host of reasons, including capital flight seeking higher interest rates in the U.S., Copa stock has stabilized and offers a nice yield at present after some modest declines. And with projections of double-digit revenue growth this year and next, there’s no reason for investors to fear it is as risky as other emerging market plays right now.
Current yield: 3.5 percent
Guangshen Railway Co. (GSH)
Another twist on international shippers for income is GSH, a roughly $3 billion railroad company serving mainland China. Like the previous pick, this stock has experienced some volatility amid a broad sell-off for emerging markets — but it also offers substantial underlying strength that makes it a good income investment on this pullback. Evidence of that strength comes not only from strong domestic revenues in China, but also news that Guangshen is a front-runner to operate high-speed trains in Britain.
Current yield: 2.4 percent
Matson (MATX)
A crucial player in global economic activity, Matson is an ocean transportation company based in Hawaii that focuses on dry container shipping of mixed commodities, packaged foods and beverages, as well as physical goods like building materials and auto parts. Basically, if you need to ship anything around the Pacific Ocean you call Matson. The shipping business may not sound glamorous, but it has a strong baseline of demand given the interconnected world economy. And since economic growth is looking up, particularly in the U.S., it stands to reason that the rising tide will lift Matson in 2018.
Current yield: 2.3 percent
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7 Shipping Stocks to Buy for the Dividends originally appeared on usnews.com
