Seanergy Maritime Holdings (NASDAQ:SHIP) Will Pay A Dividend Of $0.025

Seanergy Maritime Holdings Corp. (NASDAQ:SHIP) has announced that it will pay a dividend of $0.025 per share on the 6th of July. Including this payment, the dividend yield on the stock will be 2.3%, which is a modest boost for shareholders' returns.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Seanergy Maritime Holdings' stock price has reduced by 35% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.

Check out our latest analysis for Seanergy Maritime Holdings

Seanergy Maritime Holdings' Payment Has Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before this announcement, Seanergy Maritime Holdings was paying out 102% of what it was earning, and not generating any free cash flows either. This high of a dividend payment could start to put pressure on the balance sheet in the future.

EPS is set to fall by 44.7% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio could be 40%, which we consider to be quite comfortable, even though the current levels are slightly more elevated.

Seanergy Maritime Holdings Doesn't Have A Long Payment History

It's not possible for us to make a backward looking judgement just based on a short payment history. 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.

Seanergy Maritime Holdings Might Find It Hard To Grow Its Dividend

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. Seanergy Maritime Holdings has seen EPS rising for the last five years, at 70% per annum. EPS has been growing well, but Seanergy Maritime Holdings has been paying out a massive proportion of its earnings, which can make the dividend tough to maintain.

We should note that Seanergy Maritime Holdings has issued stock equal to 12% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

Seanergy Maritime Holdings' Dividend Doesn't Look Sustainable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. To that end, Seanergy Maritime Holdings has 7 warning signs (and 3 which are concerning) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.