Do you ever imagine yourself in an epic science fiction setting like Star Wars or Star Trek? Well, you can live out those fantasies by visiting a large, international shipping hub.
The size and scale of the cargo ships, cranes, loading docks, and storge terminals is unbelievable.
It’s like you’re gazing up at Star Destroyers.
I say this because today’s stock is an international shipping giant.
A.P. Møller — Mærsk ($AMKBY) controls 15% of the global shipping trade. It’s also a cheap stock, trading at a price to earnings ratio of just 7.10. And, an ultra-high dividend payer — with a starting yield of 39.98%.
In today’s article, I want to explain why Mærsk’s dividend is not sustainable.
And why I still think this could be a good investment, despite the looming dividend cut.
What Does A.P. Møller — Mærsk Do?
When most people think shipping, they think UPS or FedEx.
These are the two consumer-facing conglomerates that deliver your Amazon packages and important documents.
But the shipping and logistics industry goes well beyond these two household names. There are dozens of major players like J.B. Hunt, C.H. Robinson Worldwide, Expeditors International, and A.P. Møller — Mærsk.
These businesses are essential to the global supply chain.
But they get very little public attention.
Mærsk is an international logistics company that owns cargo ships, shipping containers, warehouses, tugboats, and specialty storage facilities.
If you’ve ever seen that infamous picture of canned pears with a label reading “Grown in Argentina, packaged in Thailand,” Mærsk probably played a role at some point.
Mærsk is a company that moves commodities and finished products all across the world.
As an example, I recently visited a large international shipping hub that specializes in agricultural products. Mærsk was shipping coffee beans from Brazil — which ultimately end up in Dunkin and New England Coffee brand coffees.