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Cruise Lines See Brighter Capital Markets

MIAMI ( TheStreet) -- Though Carnival (CUK) reduced its first-quarter guidance while reporting earnings last week, one positive item on deck for shareholders may be the reinstatement of the cruise-ship operator's dividend.

Last week's quarterly results may have demonstrated short-term weakness for Carnival shares, but the report also hinted at some longer-term buoyancy .

Carnival's balance sheet has improved enough that analysts now expect the company to reinstate its dividend some time next year. When asked by analysts on the earnings conference call about the dividend -- shelved by Carnival in November 2008 during the heart of the credit crisis -- executives said that a special meeting will be held in January to discuss the issue, with an announcement by the middle of the month.

"I think a quarterly common dividend reinstatement is largely expected," said Kevin Milota, a cruise-line analyst at JPMorgan Chase (JPM), who participated in the call. "Given where Carnival's earnings guidance is, and their liquidity position, it's likely to change their view on dividends."

The Carnival dividend is one of two recent signs that the capital-markets environment for cruise-ship operators has improved more rapidly than expected.

On Monday, Royal Caribbean Cruises (RCL - Get Report) received $1.1 billion in unsecured financing to help pay for its Allure of the Seas ship. BNP Paribas (BNPQY), Citigroup (C), Nordea Bank (NDBAY) and SEB each provided 25% of the funding.
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