Costamare: Profits Without Shareholder Rewards - Why The Stock Could Drop 30%
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Melissa Tucker815 FollowersFollow5ShareSavePlay(7min)CommentsSummaryCostamare Inc. faces significant headwinds due to an aging fleet and a large upcoming capital requirement for renewal.Despite record profitability and a $2.6B charter backlog, CMRE's dividend remains frozen at $0.115 per quarter, yielding just 2.8%.Management's capital allocation has been questionable, notably with an unprofitable dry bulk venture and limited shareholder returns.I estimate fair value at $11.5 per share, implying 30% downside as rates soften and fleet renewal costs mount. Andre de Wit/iStock via Getty Images Investment Thesis Costamare Inc (CMRE) has one of the oldest fleets, and management has started to renew it. Meanwhile, shareholders dividends have been frozen for the last few years despite the company experiencing its mostThis article was written byMelissa Tucker815 FollowersFollowWith a professional background spanning multiple industries, from logistics, construction to retail, I bring a diverse perspective to investing. My international education and career experiences have provided me with a global outlook and the ability to analyze market dynamics from different cultural and economic perspectives. I have been actively investing for over a decade, honing a strategy that focuses on cyclical industries while maintaining a diversified portfolio that includes bonds, commodities, and forex. My interest in cyclical sectors stems from their potential for significant returns during periods of economic recovery and growth. However, I also recognize the importance of balancing risk, which is why I incorporate fixed-income investments (long or short).Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsHow does CMRE's aging fleet impact its forward outlook and capital needs?With 26 vessels around 20 years old or more, CMRE faces over $2 billion in potential fleet renewal costs, pressuring future cash flows as rates soften.What is the current dividend policy and its implications for shareholders?The dividend has been frozen at $0.115 per quarter, yielding 2.8%, signaling management's lack of interest in increasing shareholder returns despite strong earnings.Why might CMRE underperform peers like GSL in a declining rate environment?CMRE offers lower yield, has a higher renewal burden, and management has shown weaker capital allocation, making it less attractive than GSL if rates decline.Recommended For You