It is not that equity analysts are not cheering Eagle Bulk Shipping's initiation of a dividend that will pay out a minimum of 30% of earnings. It is just that they are already looking for it to be larger.
Management at New York-listed Eagle won a positive reception from researchers in a conference call on Tuesday morning as they trotted out a long-awaited quarterly distribution.
It will place the Gary Vogel-led owner alongside peers like Star Bulk Carriers and Genco Shipping & Trading as dividend payers.
But analysts such as Magnus Fyhr of HC Wainwright and Omar Nokta of Clarksons Platou Securities came with questions about how Eagle had arrived at the formula and what conditions might allow it to pay even more than the minimum.
Eagle chief executive Gary Vogel said the company wanted a policy that was easy to understand.
"Our policy is literally just one sentence long and is based on net income," he said, contrasting it with peers that appear to pay out more but have various exceptions.
"The headline might be a full payout, but you have carveouts. We thought it was better to go with a number that was very easy to calculate."
And even at the minimum payout of 30% net income, the numbers could get large.
Fyhr estimated on the call that Eagle could earn $5 per share for the quarter just concluded and pay out nearly $1.50 per share with the new dividend.
And Noble Capital analyst Poe Fratt said in a client note on Tuesday that the third-quarter number could be $1.76, with about $5.75 per share to be handed out for all of 2022.
Nokta sounded out Vogel on whether in times of exceptional earnings Eagle would be willing to pay above the 30% threshold.
Vogel noted that Eagle has drawn down $50m from a $100m revolving credit facility that is part of its new $400m credit facility, and is looking to pay it back quickly. Plus there is always one eye on whether vessel acquisitions are attractive.
But Eagle feels "very comfortable" with its current fleet of 53 ultramax and supramax bulkers, Vogel said, with only two ships more than 12.5 years old.
"From earnings over and above, we'll look at [the revolver] and accretive acquisitions, [but} there's a very good chance the board will authorise a payment over 30% ... there's upside as long as it is supported by the business," Vogel said.