Royal Caribbean Cruises Ltd announced yesterday (3 September) that they were increasing the dividend payable to shareholders to $0.375 per share, an increase of 25%. The dividend previously was $0.30 per share. The news release included the comment that the dividend increase “reflects the company’s continuing efforts to increase shareholder returns”.
Shares in Royal Caribbean Cruises Ltd are traded on the New York and Oslo stock exchanges; at a point this afternoon (4 September) a single share would have cost $88.36. In addition to the dividend, shareholders also receive shareholder benefits amounting to a maximum of $250 OBC per stateroom for cruises of 14 nights or more. However, given that there’s a requirement to hold 100 shares (or more), that’s not a high rate of return – 100 shares would cost nearly $9,000 today so even $250 represents a return of just under 3%. Still, in these days of interest rates at almost 0%, that might be acceptable – as long as you’ve got the requisite $9,000 or so. Four years ago was the time to buy, I’m afraid – early September 2011 saw the shares hit a low of $21.64. A purchase of of 100 shares then would not only give a return of just over 10% in shareholders benefit (assuming a 14-night cruise once a year), but you’d also have got the dividends (which were lower at that time plus of course the capital gain – your 100 shares which would have cost you $2,164 in four years ago would now be worth almost $9,000, a profit (on paper) of around $6,750. Ah, the benefit of hindsight when it comes to making investments!
Royal Caribbean aren’t alone in raising their dividend this year. Carnival Corporation & PLC did the same in July, raising the dividend by 20% to $0.30 per share. They also talked in their news release about “returning value to our shareholders”. Shares in Carnival Corporation & PLC are traded on the New York & London stock exchanges – they’re a constituent company of the FTSE 100 – and this afternoon the price in London was around £33.27 per share. Their low point was also in 2011, in August, when they hit £17.50. Carnival Corporation & PLC also provide shareholder benefits, and for UK shareholders the amount is £160 OBC per cabin for cruises of 14 nights or more; again, you have to hold 100 shares or more.
Clearly, if the two leading companies can not only spend gazillions on new ships but also increase dividend payments, there must be money in this cruising lark…
Disclaimer #1: Nothing in this post should be taken as financial advice!
Disclaimer #2: I am a shareholder in Carnival Corporation & PLC.