- 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.
For further details see:
Frontline: This Is No Income Play, Despite The Recent Dividend Surge