Star Bulk Carriers has made giving a shareholder dividend its top priority as cash on hand reached into the hundreds of millions of dollars at the end of its most profitable year ever.
The Petros Pappas-led owner posted $300m in fourth-quarter profit on Thursday versus $27.1m in earnings a year ago, allowing it to give a $2 payout for the last three months of 2021.
New York-listed Star Bulk plans to keep providing a dividend, having raised it from $1.50 in the third quarter, after recording a full-year profit of $681m versus $9.67m in earnings for 2020.
“Strategically, we will protect the dividend,” president Hamish Norton said during a conference call with analysts.
The dividend is very important to us and to all the shareholders. … It’s a continuation of the strategy we’ve had.”
Chief executive Petros Pappas said that Star Bulk, which owns 128 bulkers, also plans to stay in the spot market versus signing time charter deals because it expects a stronger market following the Winter Olympics.
“We are certainly seeing this stronger market, specifically in the handy or anything ultramax and below,” he said.
Stifel analyst Ben Nolan questioned staying in the spot market, which, he said, can be volatile and make it harder to protect the dividend.
Norton responded by saying that managing volatility presents “one of the central dilemmas” of running a dry bulk shipping company.
“There’s a trade-off between being willing to accept volatility at high average rates and getting rid of volatility, and maybe suffering from lower average rate,” he said.
“Basically what we hope is the solution to that is reducing balance sheet leverage so that we can deal with operational volatility while having, you know, perhaps a lower total volatility in our result.
“But you know, it’s always a dilemma.”
