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Three Unloved Dividend-Paying Stocks

2. International Shipholding (ISH - Get Report) provides marine transport services to commercial and government customers.

Dry-bulk shippers, such as Navios Maritime (NMM) and DryShips (DRYS - Get Report), are comparable investments with worse merits. International Shipholding is TheStreet.com's top-ranked marine company due to its recent stock performance and record of consistent earnings growth. Over the past three years, International Shipholding has more than doubled profit annually, on average. The shares have fallen 22% over the past month, presenting contrarians with a buying opportunity.

Third-quarter net income stalled at $11 million, but earnings per share climbed marginally to $1.55. The company's net margin narrowed from 13% to 12% as growth in voyage expenses exceeded a 9% sales increase. Such deterioration is worrisome. Still, similarly sized marine rival Danaos (DAC) recorded a 41% profit drop, and Safe Bulkers (SB - Get Report) notched a 43% decrease. All things considered, International Shipholding is faring well. Its 0.7 debt-to-equity ratio is less than the industry average, indicating conservative leverage.

At its current share price, the stock yields 7%, with a payout ratio of 40%. The stock is cheaper than that of the average marine company, based on all of our valuation measures. The shares trade below book value per share, even though the quarterly return on equity tagged 16%, beating the industry average and the S&P 500 Index. The PEG ratio, at 0.2, compares favorably to the marine industry average of 4.1. Shipping stocks are cyclically sensitive, but International Shipholding has a beta of 0.4, noticeably lower than those of competitors.

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SYM TRADE IT LAST %CHG
DRYS $0.74 -1.92%
ISH $11.82 -1.42%
MO $51.75 -0.58%
PM $85.26 0.35%
SB $3.50 -1.41%

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