ZIM - ZIM Integrated stock as investors hope for a big dividend
2024-02-01 09:12:27 ET
ZIM Integrated (NYSE: ZIM) stock price continued rising this week as investors continued to anticipate a big dividend. After bottoming at $6.45 in December, the stock has jumped by more than 137%, making it one of the top performers in Wall Street.
Big dividend likely as shipping costs rise
ZIM Integrated shares have surged as investors cheer the ongoing crisis at the Red Sea that has pushed shipping costs higher. Data by London-based Drewry shows that the World Container Index (WCI) has surged to almost $4,000 from last year’s low of $1,342.
ZIM and other shipping companies like Hapag Lloyd and Maersk do well when shipping costs are high and operation costs are low. The latter is a big challenge since shipping costs are getting a bit high as energy costs rise.
ZIM is also having to contend with the crisis at the Panama Canal, which has become a crisis as water levels have dropped. While efforts to save the Panama Canal are underway, experts agree that the process will take years.
Still, despite these risks, analysts believe that ZIM Integrated will restart its dividend this year. And this dividend could be big because of how the company pays it. It usually sets a portion of its profits to pay back its investors through dividends. As a result, it suspended its payouts in 2023 as its business swung into losses. In a recent note, an analyst at Jefferies said :
“Taking liners from a market with limited pricing power to one with meaningful pricing power, [and] given ZIM’s levered platform, we see the equity revaluing significantly in the coming months.”
ZIM Integrated stock technical analysis
Turning to the daily chart, we see that the ZIM share price has been in a remarkable comeback in the past few weeks. This rally has seen it jump above the 38.2% Fibonacci Retracement level. Most importantly, it has moved above the 50-day and 200-day Exponential Moving Averages (EMA).
The two indicators are about to have a crossover, which is known as a golden cross. This is one of the most bullish signs in the market. Oscillators like the Relative Strength Index (RSI) and the Stochastics have all pointed upwards.
Therefore, while ZIM is still a risky company, I believe that the stock has more upside in the coming months. Besides, there are signs that shipping demand is rising as the world economy recovers. Just this week, the IMF lifted the global economic outlook.
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