Daily Stock Pick: December 23rd, 2022

The stock market is about to finish its worst year in decades. But every cloud has its silver lining. Eventually, every bear market throughout history has represented an opportunity for patient investors looking to pick up shares in desirable names at bargain prices. The question isn’t “if” you should be looking for stocks to buy, but which stocks to buy.  

Amid unrelenting inflation and a strong potential for a recession, volatility is widely expected to continue as we head into the new year, making the job of selecting stocks difficult. A logical move in times like these is dividend stocks, which pay you just to hold them. Dividend-paying companies regularly reward investors directly with a portion of the cash flow.  

The most desirable dividend stocks have a history of raising payouts over time as the company’s profits grow. Today we’ll take a look at a high-yielding stock that seems ripe for the picking as we head into the new year.  

With shipping rates down from record levels, it’s unsurprising that many shipping stocks have been whacked hard this year, creating opportunity for investors looking for dividend stocks. According to the International Chamber of Shipping, 90% of global trade passes through the maritime shipping industry. This is a very volatile sector, but it’s essential to the world’s supply chain.

Anyone who has kept tabs on the global supply chain and shipping saga that’s been unfolding since the outbreak of covid is probably familiar with Genco Shipping (GNK). The company owns a fleet of 44 ships it leases for dry bulk transportation of goods like grain, coal, and iron ore. The going rate to rent one of Genco’s ships is no less than $27,000 per day, which provides some solid cash flow that the company uses to reward its shareholders.  

Dry bulk shipping rates, along with GNK’s share price, have fallen in recent months. Still, as China recovers from recent lockdowns, it’s hard to see the pullback in share price as anything less than an opportunistic bargain. This is a very volatile sector, but it’s essential to the world’s supply chain. 

GNK’s share price is up 6% over the past month. Although the company missed consensus EPS and revenue estimates in the third quarter, it remained consistent with its previously outlined value strategy. The company’s prudent cargo coverage in Q2 resulted in significant benchmark freight outperformance in Q3, allowing Genco to pass the savings onto its investors via a 56% quarterly dividend increase on a sequential basis. Over the last four quarters, the company has declared dividends of $2.74 per share, delivering on its commitment to return substantial capital to shareholders. GNK currently pays a 20% yield.