More Frontline Thoughts
August 20th, 2006 by Grant in: Investing, Retirement, Stock ThoughtsI’m getting closer to narrowing down a placement for my Roth IRA contribution, and am strongly considering Frontline Ltd (FRO: chart, web).
As I mentioned in an earlier post, Frontline pays a 14% dividend, with a payout ratio of 109%. In a round about way, they’re tied to the oil and gas industry, which I’ve tried to shy away from since I’m overweight in oil and gas in the first place.
However, Frontline gives me worldwide exposure to the shipping and freight industry, and even if oil prices go down, demand for shipping via imports and exports will still remain high.
Frontline will hold their second quarter conference call on Tuesday, and hopefully I’ll be able to extract some information from it that will confirm or refute my choice to add FRO to my portfolio.
To be continued…
Leave comments
Subscribe to Comments
Loading ...
August 22nd, 2006 at 8:13 am
Hi, I’m a newbie to investing (started about 6 months ago) and an occasional blogger, so I appologize in advance if my question seems ridiculous. I’ve often read that shippers such as frontline are levered to the supply of ships rather than the demand to ship oil. Otherwise, FRO is looking pretty attractive, especially considering the dividend support might make a big difference in a slowing economy.
Oh, and I would like to be able to put the (chart, web) link for the symbols of the stocks I mention on my site as well. How did you do that? Thanks!
~Jeff
August 22nd, 2006 at 8:12 pm
That’s an interesting thought, Jeff. I think FRO may have some link to shipping supply, but I don’t think it’s the driving factor behind the industry. I could be wrong.
As with refineries, large ships are not something you can build over night if you find yourself running out. So you could have a point. However, look at the demand from Asia for not only petroleum products but also coal. Their economy is supporting the demand all on its own.
I’ll email you with answers to your blog related questions!
-Grant
August 22nd, 2006 at 10:09 pm
…guess it was a good idea not to pull the trigger on FRO.
August 24th, 2006 at 7:33 am
FRO isn’t a bad idea. I think they’ll be very well off for several quarters (years?) to come.
Buy on the pull backs, and let your divies ride!
August 26th, 2006 at 4:42 pm
Jeff, you aren’t gonna make big money every day. If you’re a buy and hold type of guy, it really doesn’t matter where you buy, so long as you’re dividends keep rollin in.
Frontline is (still) a good buy IMO
August 29th, 2006 at 7:44 pm
[…] Naturally, this scenario is the largest risk to my potential Frontline (FRO: chart, web) position. While I’m not necessarily looking to get into FRO for a price appreciation play, but rather for a dividend play, the future dividend payout is based heavily on crude oil demand. […]