Eagle Bulk Shipping is strongly considering implementing a shareholder dividend — something some noted peers already have adopted — and has firm ideas about what the payout would need to look like.
That was the takeaway from chief executive Gary Vogel during an online interview with Value Investor's Edge's J Mintzmyer as the analyst/investor probed on when a dividend might be coming.
"That’s a decision that the board will take, and clearly given the developments in the market, it’s front and centre," Vogel said.
While Vogel termed it "premature" for him to suggest when this might happen, he also cited his own conviction that a payout would need to meet two criteria.
"One, it will be meaningful — it’s not going to be window dressing, it needs to be done because it’s returning a meaningful amount of capital to shareholders — and secondly, that it’s sustainable.
"I’m firm in my view that to put a dividend in and then to cut it or stop it completely I think is worse than not having one. So we will be very considerate as to how we go about it. It should be clear and easy to compute."
Like other listed dry bulk owners, Connecticut-based Eagle Bulk has been virtually printing money in a cyclically strong first half.
A couple of the Stamford owner's prominent peers — New York's Genco Shipping & Trading and Greece's Star Bulk Carriers — have used the bulker market boom to either revamp or restore their dividend policies.
Genco has paid a dividend but is transitioning to a low-debt, high-payout model expected to take effect in the fourth quarter, with first payment in the opening quarter of 2022.
Star Bulk, meanwhile, announced at its last quarterly earnings that the improved dry bulk market had triggered conditions to restore its payout, set at $0.30 per share for the first quarter and expected to rise substantially.
Vogel's comments caused Mintzmyer to wonder whether Eagle Bulk was considering a fixed payment.
"Are you saying the dividend wouldn't be a variable structure — it wouldn't be 50% of earnings or something like that?" Mintzmyer asked.
"No, I'm not saying that," Vogel replied. "I do think it should be clear, easy to calculate and meaningful.
"But to have a strictly fixed dividend given the cyclical nature and volatility of shipping over the long haul, even though we're constructive on the market, might not be the right way to go. You'll have to stay tuned."
