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S&P 500   5,087.03
DOW   39,069.11
QQQ   438.07
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Nvidia, Royal Caribbean rise; Rivian, Etsy fall, Thursday, 2/22/2024
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Wall Street sees a solid year ahead for homebuilders, though mortgage rates remain a wildcard
S&P 500   5,087.03
DOW   39,069.11
QQQ   438.07
Top-Rated AMD nears major breakout level
Income Expert and Author of Get Rich With Dividends Is Giving Away His Top Income Secrets… FOR FREE! (Ad)
Roku stock and the mother of all entry opportunities
AI powerhouse NVIDIA will hit $1000 soon
AI Stock Caught Trading Under Secret Name (Ad)
Nvidia, Royal Caribbean rise; Rivian, Etsy fall, Thursday, 2/22/2024
Rivian shares gets discounted; shares can move lower 
Income Expert and Author of Get Rich With Dividends Is Giving Away His Top Income Secrets… FOR FREE! (Ad)
The Trade Desk: 3 reasons to buy before a new all-time high
Wall Street sees a solid year ahead for homebuilders, though mortgage rates remain a wildcard
S&P 500   5,087.03
DOW   39,069.11
QQQ   438.07
Top-Rated AMD nears major breakout level
Income Expert and Author of Get Rich With Dividends Is Giving Away His Top Income Secrets… FOR FREE! (Ad)
Roku stock and the mother of all entry opportunities
AI powerhouse NVIDIA will hit $1000 soon
AI Stock Caught Trading Under Secret Name (Ad)
Nvidia, Royal Caribbean rise; Rivian, Etsy fall, Thursday, 2/22/2024
Rivian shares gets discounted; shares can move lower 
Income Expert and Author of Get Rich With Dividends Is Giving Away His Top Income Secrets… FOR FREE! (Ad)
The Trade Desk: 3 reasons to buy before a new all-time high
Wall Street sees a solid year ahead for homebuilders, though mortgage rates remain a wildcard

Zim Integrated Shipping Services Stock: High Yield or High Risk? 

Zim Integrated Shipping: A High Yield or High Risk? 

Key Points

If you are looking at the ultra-high 111% dividend payout for Zim Integrated Shipping (NYSE: ZIM) and thinking, “This is too good to be true,” you're right. There are factors at play in this yield within Zim Integrated Shipping Services stock that makes it meaningless to investors but not unattractive once you boil it down to its essence. The No. 1 takeaway from the yield, however, is the company has a managed distribution plan that says it will pay 30% of earnings in dividends. The recent payouts are due in large part to the pandemic-boosted business.

Analysts Are "Holding" Zim Integrated Shipping 

The analysts are "holding" Zim Integrated Shipping because it still pays a high dividend even with the decline in payments seen over the last few. The six analysts with current ratings have it pegged at a firm "hold" but this is down from a much stronger "hold" earlier in the year. You can blame a slowdown in business attributed to a peak in pricing and a slowdown in volume growth. Despite this, the company is forecasting revenue growth for the year and it could easily outpace the forecast given the strength posted by names like Ford NYSE: F and General Motors NYSE: GM which are heavily dependent on the global supply chain. 

The "hold" rating is amplified by a price target that screams "buy" more than it says "hold." The consensus target, which is down in the 12-, three- and one-month comparisons, is still more than 75% above the recent price action and even the low price target offers some upside for investors. The low price target is the most recent set put in place by Jefferies and may mark the low point for the company as it trades at a deep discount to its earnings potential. 


Zim Integrated Shipping trades at less than 0.75x its earnings which is a very deep discount relative to any comparison commonly used by the market. Even its peers, which trade at deep discounts, are valued at a rate 4x higher which suggests a rebound in the price action is due or perhaps overdue. Looking forward, the valuation relative to next year’s consensus expectations is more in line with peers like Star Bulk Carriers and Matson but the consensus figures may underestimate the company’s earnings power. 

Zim Integrated Shipping Raises its Dividend Outlook 

Zim Integrated Shipping raised its dividend outlook when it issued the second quarter earnings report in August. This has the quarterly payout for the first three quarters of the year (up to 30% of earnings from 20%) and will have the final annual payout in December up to almost 50% of earnings, including the prior payment. Based on the results and payouts in the first half of the year, the payouts in the second half of the year could top $22 or almost 100% of the current share price. Looking out to next year, assuming the analysts are correct in their earnings forecasting, the payout could fall to as little as $4 annually, which is still a robust 16% yield. The risk for investors is that share prices will continue to trend lower. 

The Technical Outlook: Zim Integrated Shipping Sinks to the Bottom 

Shares of Zim are in a downtrend and they may move lower. There is a factor that may indicate a bottom. The valuation relative to next year’s earnings is in line with peers and may keep the price from moving lower, assuming the outlook does not also move lower. In this light, price action may be indicating a bottom at $23 but it is too soon to call it confirmed. The company will next report earnings on November 16 and may move the market at that time. 

Zim Integrated Shipping: A High Yield Or High Risk? 

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Should you invest $1,000 in ZIM Integrated Shipping Services right now?

Before you consider ZIM Integrated Shipping Services, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and ZIM Integrated Shipping Services wasn't on the list.

While ZIM Integrated Shipping Services currently has a "Reduce" rating among analysts, top-rated analysts believe these five stocks are better buys.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Matson (MATX)
4.299 of 5 stars
$114.86+0.6%1.11%13.71Hold$111.67
Star Bulk Carriers (SBLK)
3.9272 of 5 stars
$23.01+1.6%3.82%13.00Buy$53.50
ZIM Integrated Shipping Services (ZIM)
0.4867 of 5 stars
$12.51+0.4%51.16%-0.70Reduce$10.43
Compare These Stocks  Add These Stocks to My Watchlist 

Thomas Hughes

About Thomas Hughes

  • tmhughes.writeon@gmail.com

Contributing Author

Technical and Fundamental Analysis

Experience

Thomas Hughes has been a contributing writer for MarketBeat since 2019.

Areas of Expertise

Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies

Education

Associate of Arts in Culinary Technology

Past Experience

Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights. 


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