45%-Yielding ZIM Stock Reports “Outstanding” 2024
April 1, 2025
45% Upside with ZIM Integrated Shipping Stock?
The crisis in the Red Sea continues full steam ahead, as shipping companies say they will continue to make the longer trip around Africa with violence in the region flaring up. While the Houthis state they will only target ships with ties to Israel, this reassurance has not resulted in higher ship traffic through the Red Sea and Suez Canal.
As a result, longer trading routes and higher shipping costs are expected to remain in place for at least the first half of 2025. This is good news for a marine shipping company like ZIM Integrated Shipping Services Ltd (NYSE:ZIM).
Founded in Israel in 1945, ZIM Integrated Shipping is a global container shipping company operating 143 vessels, all of which are currently chartered. (Source: “Q4 & FY 2024 Financial Results,” ZIM Integrated Shipping Services Ltd, March 12, 2025.)
It has operations in more than 100 countries, serving approximately 33,000 customers in over 300 ports. Core routes include the Pacific, Latin America, Atlantic, Cross-Suez, and Intra-Asia routes. (Source: “Corporate Overview,” ZIM Integrated Shipping Services Ltd, last accessed March 25, 2025.)
“Outstanding” 2024 Results
Times aren’t always good in marine shipping, with earnings dependent on where we are in the economic cycle, shipping volumes, shipping costs, and even black swan events like the 2020 health crisis and current challenges in the Middle East. Right now, though, , ZIM Integrated Shipping is firing on all cylinders (Source: “ZIM Reports Financial Results for the Fourth Quarter and the Full Year of 2024,” ZIM Integrated Shipping Services Ltd, March 12, 2025.)
For the fourth quarter ended December 31, 2024, the company announced that revenue increased 80% on an annual basis to $2.17 billion. Net income came in at $563.0 million, or $4.66 per share, which was a big improvement over the 2023 fourth-quarter net loss of $147.0 million, or negative $1.23 per share.
ZIM Integrated Shipping’s adjusted earnings before income, taxes, depreciation, and amortization (EBITDA) were up 409% on an annual basis at $967.0 million. Its operating income was $658.0 million, compared to an operating loss of $54.0 million in the same prior-year period.
Fourth-quarter carrier volume was up 25% on an annual basis at 982,000 twenty-foot equivalent units (TEUs). The average freight rate per TEU was up 71% at $1,886.
For the full year, the company’s revenue advanced 63% at $8.43 billion. ZIM Integrated Shipping reported net income of $2.15 billion, or $17.82 per share, up from a 2023 net loss of $2.68 billion, or negative $22.42 per share.
The company’s full-year adjusted EBITDA jumped 252% to $3.69 billion. Its operating income for the full year was $2.53 billion, compared to an operating loss of $2.51 billion in 2023. Full-year carrier volume was up 14% at 3,751 thousand (3.8 million) TEUs. In full year 2024, its average freight rate per TEU was up 57% at $1,888.
Commenting on the results, Eli Glickman, ZIM Integrated Shipping’s president and chief executive officer, said, “We are pleased and proud with the company’s outstanding performance in 2024, during which we delivered record carried volume as well as exceptional profitability.
“We enter 2025 with a more resilient business and modern cost- and fuel-efficient capacity, 40% of which is LNG-fueled. While acknowledging that our industry is highly volatile, exacerbated by current uncertainty related to geopolitics, international political dynamics and economic, fiscal and monetary policies, we are confident in our agile approach and competitive position in the industry.”
Looking ahead, the company’s 2025 outlook for adjusted EBITDA of $1.6 billion and adjusted operating income of between $350.0 million and $950.0 million assumes that trade conditions in the Red Sea will not normalize until the second half of the year at the earliest.
Quarterly Payout Increased to $3.17/Share
ZIM stock’s dividend payout is contingent on profitability. And frankly, the company doesn’t have a long dividend history, having only paid out its first dividend in August 2021. ZIM Integrated Shipping suspended its dividend in the back half of 2023 and reinstated it in June 2024.
In the first quarter of 2024, ZIM stock paid out $0.23 per share, raising it to $0.93 per share in the second quarter, and lifting it again in the third quarter to $3.65 per share (this included a special dividend of $0.84 per share).
In the fourth quarter, ZIM Integrated Shipping declared a dividend of $3.17 per share, up from the regular dividend of $2.81 per share in the third quarter. In 2024, ZIM stock paid out total dividends of $7.98 per ordinary share, or 45% of 2024 net income.
Minus the third-quarter special dividend, ZIM stock’s annual payout is $7.14 per share, for a forward dividend yield of 45.71%. With the special dividend, the total payout rises to $7.98 per share, for a forward dividend yield of 52.6%.
For now, this distribution is safe; the payout ratio is just 22.28%, well below the 90% threshold I’m willing to stomach.
45% Upside Potential with ZIM Stock?
While ZIM stock has performed well on an annual basis, rising 113%, it has also traded in a relatively tight range over the last six months. Despite it being down 14% year to date, the outlook for ZIM stock remains solid, with Wall Street analysts providing a 12-month share price forecast of $15.35 to $22.00. This points to potential upside of 1.2% to 45%.
Chart courtesy of StockCharts.com
The Lowdown on ZIM Stock
The marine shipping industry can be volatile, but right now, ZIM Integrated Shipping is operating in a sweet spot. It reported strong fourth-quarter and full-year financial results, which included record carried volume. The company continues to have a strong balance sheet and liquidity, with total cash of $3.14 billion. ZIM Integrated Shipping also provided solid guidance for 2025.
Thanks to the shipper’s strong cash position and industry tailwinds, ZIM stock is able to provide shareholders with a strong quarterly payout. This should continue in 2025.
This is good news for shareholders and the 306 institutions that hold 54.65% of all outstanding ZIM shares. The three biggest holders are Renaissance Technologies LLC, Goldman Sachs Group, and Arrowstreet Capital.
