Seanergy Maritime Holdings (NASDAQ:SHIP) Has Announced A Dividend Of $0.025

The board of Seanergy Maritime Holdings Corp. (NASDAQ:SHIP) has announced that it will pay a dividend of $0.025 per share on the 6th of October. This means the annual payment will be 1.9% of the current stock price, which is lower than the industry average.

Check out our latest analysis for Seanergy Maritime Holdings

Seanergy Maritime Holdings' Earnings Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. Prior to this announcement, the dividend made up 157% of earnings, and the company was generating negative free cash flows. This high of a dividend payment could start to put pressure on the balance sheet in the future.

Over the next year, EPS is forecast to expand by 90.0%. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 28% which would be quite comfortable going to take the dividend forward.

Seanergy Maritime Holdings Doesn't Have A Long Payment History

The company hasn't been paying a dividend for very long at all, so we can't really make a judgement on how stable the dividend has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

Dividend Growth Could Be Constrained

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Seanergy Maritime Holdings has seen EPS rising for the last five years, at 80% per annum. Strong earnings is nice to see, but unless this can be sustained on minimal reinvestment of profits, we would question whether dividends will follow suit.

An additional note is that the company has been raising capital by issuing stock equal to 10% of shares outstanding in the last 12 months. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

The Dividend Could Prove To Be Unreliable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 5 warning signs for Seanergy Maritime Holdings (2 are concerning!) that you should be aware of before investing. Is Seanergy Maritime Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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