Why GOGL Stock Has Been Crushing the S&P 500
Dry bulk shipping companies like Golden Ocean Group Ltd (NASDAQ:GOGL) have been riding a wave of cash as ongoing conflicts in the Middle East and strong industry tailwinds have helped drive up their sales and earnings.
Dry bulk cargo includes iron ore (essential for steel production), coal, grain, and minerals (used in metallurgy, construction, and manufacturing).
A cornerstone of global trade, the dry bulk shipping market is expected to grow from $155.4 billion in 2023 to $262.4 billion by 2032, expanding by a compound annual growth rate (CAGR) of more than 5.99%. (Source: “Dry Bulk Shipping Market Size Projected to Exceed USD 262.4 Billion by 2032 with a Notable CAGR of Over 5.99%,” Towards Automotive, last accessed May 1, 2024.)
The demand for dry bulk shipping is expected to increase significantly in 2024. A shortage of dry bulk ships, plus a rise in marine freight rates of anywhere from 20% to 50%, should be a winning combination for Golden Ocean.
Golden Ocean is the world’s biggest publicly listed owner of large dry bulk ships. (Source: “GOGL – Fourth Quarter 2023 Results,” Golden Ocean Group Ltd, February 28, 2024.)
It currently owns and operates a fleet of 94 dry bulk carrier vessels, focusing on the largest types: Capesize and Panamax. (Source: “Home Page,” Golden Ocean Group Ltd, last accessed May 1, 2024.)
Capesize vessels, which are the biggest bulk ships, are typically used to transport coal and iron ore. Because of their large size (twice as big as an NFL football field), they cannot pass through the Panama Canal. Instead, they need to travel around the Cape of Good Hope (hence the name “Capesize”).
Panamax vessels are the biggest ships that can navigate the Panama Canal.
Golden Ocean Group Ltd Had Banner Q4 Results
By virtually every measure, the fourth quarter of 2023 was excellent for Golden Ocean. For instance, the company reported net income of $57.5 million, or $0.29 per share, compared to $28.7 million, or $0.14 per share, in the third quarter. (Source: Golden Ocean Group Ltd, February 28, 2024, op. cit.)
Its adjusted net income in the fourth quarter was $64.6 million, versus $22.0 million in the third quarter. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were $123.2 million, compared to $78.9 million in the third quarter.
Golden Ocean Group Ltd reported fourth-quarter time charter equivalent (TCE) rates for Capesize vessels of $25,176 per day and TCE rates for Panamax vessels of $16,738 per day. For the company’s entire fleet, the fourth-quarter TCE rate was $21,958 per day.
Golden Ocean Stock Has Paid Dividends for 11 Consecutive Quarters
Golden Ocean’s expanding fleet, robust TCE rates, and high cash flow have translated to reliable dividends. In March, GOGL stock paid dividends of $0.30 per share. (Source: “Dividend,” Golden Ocean Group Ltd, last accessed May 1, 2024.)
As of this writing, that works out to a yield of 4.26%.
Golden Ocean stock’s quarterly dividends fluctuate based on the company’s TCE rates and earnings.
As you can see in the below table, Golden Ocean Group Ltd’s payouts can fluctuate wildly. In fact, during the COVID-19 pandemic, the company suspended its dividends, reinstating them in the first quarter of 2021. Since then, GOGL stock has paid dividends for 11 consecutive quarters.
| Payment Date | Dividend Per Share |
| March 25, 2024 | $0.30 |
| December 13, 2023 | $0.10 |
| September 19, 2023 | $0.10 |
| June 6, 2023 | $0.10 |
| March 9, 2023 | $0.20 |
| December 5, 2022 | $0.35 |
| September 14, 2022 | $0.60 |
| June 8, 2022 | $0.50 |
| March 10, 2022 | $0.90 |
| December 16, 2021 | $0.85 |
| September 20, 2021 | $0.50 |
| June 11, 2021 | $0.25 |
| March 19, 2020 | $0.05 |
Fabulous Share-Price Performance
When times are good, Golden Ocean Group Ltd’s ‘s share price performs well. As of this writing, Golden Ocean stock is up by:
- 10% over the last month
- 39% over the last three months
- 105% over the last six months
- 50% year-to-date
- 70% year-over-year
- 38% since I wrote about GOGL stock in January
Chart courtesy of StockCharts.com
The Lowdown on Golden Ocean Group Ltd
As mentioned earlier, Golden Ocean Group is the world’s leading publicly listed owner of large dry bulk vessels.
The marine shipping company’s sizeable modern fleet has mainly been exposed to the spot market, resulting in a terrific financial performance in the fourth quarter of 2023.
Golden Ocean Group Ltd entered 2024 with high demand in Asia. Moreover, thanks to a broad-based global economic recovery, the overall picture for the company is healthy. The market for Capesize and Panamax dry bulk vessels has been outperforming the broader freight market.
With fleet growth in the Capesize segment of the shipping industry at historic lows, and the demand for dry bulk vessels expected to grow at a CAGR of about six percent over the coming years, the outlook for Golden Ocean stock is pretty solid.