ZIM Integrated Shipping Services (ZIM): Don’t Miss This Dividend

ZIM Integrated Shipping Services (NYSE: ZIM) offers investors a strong dividend in the shipping industry. Company policy is to contribute 20% of net income quarterly and 30% to 50% of net income on an annual basis. ZIM’s last annual dividend was $11.4 with a yield of 24.08%. ZIM’s dividend along with its low P/E ratio of 0.99 makes it tempting to add to one’s portfolio, especially if diversification into another industry is seen as desirable.


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Presentation of the company ZIM

ZIM is one of the smaller players in the shipping industry and operates in regions ranging from Asia to the East Coast of the United States and throughout the Asian continent itself. The company is headquartered in Israel.

It should be noted that the company’s dividend can be considered safe and sustainable. ZIM has plenty of cash on its balance sheet to pay investors, which currently stands at $779 million. So even in the event of a downturn, investors can be sure that their dividends will be paid.

Another factor that makes ZIM attractive is its impressive quarterly results. Business in the shipping industry across the board has boomed due to an increase in shipping rates, primarily caused by supply chain congestion. For ZIM, the company increased revenue 113% year-over-year while operating profit increased 60% to $2.2 billion.

ZIM’s meteoric revenue growth is likely to slow as signs that the global economy is about to enter recession continue to mount. Analyst consensus is that next year’s EPS will be significantly lower at 14.19 from 44.03 at the time of writing. Furthermore, the company’s turnover of 13.46 billion is expected to shrink to 9.2 billion in 2023. These could be considered pessimistic figures, which rely heavily on the unpredictable effects of a possible recession. .

ZIM Dividend Risks

The main risk investors face with ZIM is that its dividend will be cut short if the company suffers a reduction in net income. The IMF reported that shipping costs began to ease after consumers unleashed their pent-up demand for durable goods. It is therefore likely that these fees have peaked, which will affect ZIM’s revenue in the future.

Another factor is that ZIM is a small company in the shipping industry, and therefore more sensitive to variations in supply and demand for its services. A large company may have more influence over these factors while ZIM will be forced to overcome volatility.

The essential

While worldwide shipping prices may have peaked, which will no doubt affect ZIM’s revenue and bottom line, investors can still benefit from the company’s generous dividend which is backed by a large safety margin in the form of liquidity.

Dividend aside, ZIM remains an attractive business in its own right. ZIM has a lower P/E ratio than many of its competitors in the shipping space and has recorded historically high earnings and revenue.