FRO - Frontline: This Is No Income Play Despite The Recent Dividend Surge

• The oil shipping company, Frontline has rewarded shareholders with massive dividends during 2020 and technically has a yield of around 30%.
• Apart from the obvious fact that these dividends will be reduced in the future, they are not a suitable income investment when looking at their fundamental reality.
• The biggest problems stem from their very volatile operating cash flow that can turn on a dime, plus the long-term risks as the world moves away from fossil fuels.
• To make matters worse, their leverage is high and whilst this does not necessarily impact their ability to remain a going concern, it further hampers their dividend prospects.
• Given the uncertainty over their short-term future, questionablelong-term future and fundamentally unattractive financial dynamics, I believethat a neutral rating is appropriate.

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