How To Earn A Nearly 22% Dividend On This Global Shipping Stock (ZIM) That Just Raised Dividends For The 5th Time In Five Years
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Companies that offer services in high demand around the globe have historically been strong performers when it comes to dividend stocks. Very few services are in higher demand than global shipping because they are vital in bringing products from factories, farms and foundries to consumer markets. ZIM Integrated Shipping Services Ltd. is a shipping company on a five-year streak of paying increased dividends and its latest increase has left its shareholders turning cartwheels.
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ZIM Integrated Shipping Services (NYSE: ZIM), also known simply as ZIM, was founded in Israel (then Palestine) in 1945 and spent much of its early history as a conduit for immigrants to reach the fledgling nation of Israel. The global airline industry had yet to emerge, meaning ocean liners were people’s most viable form of long-distance transportation.
ZIM eventually phased out its passenger shipping business and pivoted to cargo shipping in the 1960s. However, the company didn’t just pivot to cargo shipping; it purchased special-purpose boats like refrigerated ships and oil tankers. Both of those businesses would become increasingly lucrative over the next several decades.
ZIM’s ability to reliably transport perishable items in its refrigerated ships and oil in its tankers saw the company grow exponentially. Although originally operated as a subsidiary of the Israeli government, ZIM went completely private in 2004 after its current ownership group bought out the Israeli government’s share.
The company remained in private hands until it sold 14.5 million shares at $15 each and raised $217 million (per public filings and ZIM investor relations page data) at its January 2021 initial public offering (IPO). ZIM’s IPO came when the world was still recovering from the COVID-19 pandemic and supply chain issues drove the price of goods and services.
That was bad news for consumers but good news for ZIM stockholders and ZIM shares skyrocketed to the $71 range in the Spring of 2022. However, ZIM could not retain that momentum and its shares dropped significantly over the next several years as the global economy sputtered and high interest rates curbed consumer spending. The bottom came in November 2023, when ZIM shares traded in the $7 range.
ZIM shares have spent much of 2024 rebounding and currently sit at $18.40. That’s admittedly much lower than its $71 peak but it’s worth noting that ZIM has increased its dividend five times in the past five years. According to Zacks.com and ZIM’s public filings, ZIM’s average dividend yield during that period is 5.22%. ZIM continued increasing dividends during its Q3 2024 earnings call in late November.
According to Benzinga’s estimates, ZIM is currently paying a very strong 21.81% dividend on its $18.40 share price, which translates to $4.01 per share. If ZIM can sustain that dividend for the foreseeable future, 2025 could be a good year for the company’s shareholders. The downside risks are similar to those of any global shipping company: a global economic slowdown, a spike in oil prices or political instability.
Investors will want to pay particularly close attention to the last two potential risks. ZIM is based in a region experiencing high levels of instability and conflict. The war in Gaza and uncertainty about the new government in Syria could both roil the markets and threaten ZIM’s bottom line. With that said, a dividend approaching 22% is hard to ignore. ZIM is worth a look from passive income investors.
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