ZIM Integrated Shipping Services (NYSE: ZIM) is set to release its first quarter earnings on May 21st, 2024. If it announces the return of the ZIM dividend then the stock price could potentially surge. But, this shipping goliath might be a stock that you want to add to your arsenal anyway. With that in mind, I’ve conducted research into ZIM’s current financial standing to let you know whether or not to buy ZIM.

ZIM Dividend: When Will Dividends Resume?

If you’re not familiar, ZIM is a publicly traded Israeli international cargo shipping company. According to Linerlytica, ZIM currently has the 9th largest global capacity of all shipping companies. ZIM ships containers all over the world, including between Asia, Europe, North America, and Latin America.

ZIM’s dividend receives special attention from investors because it has paid some hefty dividends in the past. ZIM’s business surged during the pandemic. In response to the company’s surging profits, it increased its dividend to as high as $17 per share at one point. But it stopped paying dividends on 4/4/2023, according to data from Nasdaq.com. 

When it comes to why ZIM stopped paying a dividend, the company cited a change in the global market conditions for shipping, as well as the eruption of the Israeli-Palestinian conflict. Only about 10% of ZIM’s business takes place in Israel. But, as an Israeli company, it still needs to watch this conflict closely.

To get a better idea of ZIM’s current financial state, I dug through its most recent earnings report (released March 13, 2024). 

ZIM’s Last Quarter

The main takeaway from ZIM’s last quarterly report is this: business seems really bad. But, that’s just because 2021 and 2022 were such profitable years. 

During 2021 and 2022, ZIM was able to charge an immense premium for shipping space. This occurred because the pandemic closed down ports around the world, limiting the shipping lanes available and causing prices to surge. As a global shipper, ZIM profited big time from this event. Since then, supply lines have opened back up and prices have dropped – something that’s apparent from ZIM’s falling revenue.

For FY 2023, ZIM reported full-year revenue of $5.156 billion and a net loss of $2.8 billion. Not great at all. However, ZIM noted that this loss was mainly driven by a non-cash impairment loss of $2.06 billion in the third quarter. 

A non-cash impairment loss occurs when the value of an asset on a company’s balance sheet decreases, but the company doesn’t actually get rid of the asset. Instead, it recognizes the decrease in value as an impairment loss. I’m not entirely sure what this impairment loss was related to. But, I know that ZIM has been investing heavily in its fleet – so this loss could be ZIM writing down the value of its existing fleet. 

Either way, almost every single financial metric was down significantly year over year:

  • FY 2023 operating loss of $2.51 billion compared to operating income of $6.14 billion in FY 2022.
  • Q4 2023 operating loss of $54 million, compared to operating income of $585 million in Q4 2022. 
  • Q4 2023 net loss of $147 million compared to a net profit of $417 million for Q4 2022. 

ZIM Stock: Pros to Consider

Looking forward, ZIM’s management expects to secure an adjusted EBITDA of between $850 million to $1.45 billion this year. This means that ZIM should be back on a path to profitability this year, after posting a fairly rare loss in 2023.

Additionally, ZIM still had $2.69 billion cash on hand as of December 31, 2023 (per its last earnings report). This means that the company has plenty of runway to handle more losses, should that be necessary.

On another bright note, ZIM has been investing heavily into its fleet. In 2023, renewing the company’s fleet of ships was a huge priority. It delivered 24 new vehicles to its fleet, which will be more sustainable and powered by LNG. This means that ZIM will be less reliant on older, more expensive ships moving forward.

Finally, ZIM operates in an industry that I consider essential in today’s world. The world is hooked on ordering goods online and receiving them promptly. To do that, things need to be shipped around the world – and ZIM is right there to assist. However, ZIM stock is not without risk.

ZIM Stock: Risk Factors to Consider

The biggest downside to being a global shipping company is that you’re exposed to problems all around the world. All types of issues could prevent themselves. For example, if a ship gets stuck in the Suez Canal or the Francis Scott Key Bridge in Baltimore collapses then your company could be at risk. 

Risks like these can also be both direct or indirect. One of ZIM’s ships could be directly damaged. Or, it could lose revenue from a closed port. For investors, it’s important to be aware of the potential risks that come with operating on such a broad scale.

So, with all the pros and cons out of the way, what’s there to be said about the ZIM dividend?

Will ZIM Dividend Return?

I believe it’s unlikely that the ZIM dividend payments will return anytime soon. This is mainly due to the ongoing conflict in Israel. When a company announces a dividend, it usually signals two things:

  1. Business is going really well
  2. The company doesn’t have a better place to invest the money, so they’re just giving it back to shareholders

For ZIM, it seems as though the future is brighter ahead than 2023 was. But, I do not think that the company is so confident in the future that it will bring back its dividend just yet. If 2024 goes well then I can see them relaunching the dividend in early 2025.

However, this doesn’t mean that you shouldn’t buy ZIM stock at all. In fact, buying a stock just for its dividend is not advisable. After all, you want your money to grow over time. If you just want a monthly payment then you should explore fixed income assets, which will likely give you a higher yield.

Check out our Dividend Calculator to estimate your earnings.

On one hand, ZIM stock has underperformed the market in recent years, down 24% YTD and up just 6% over 5 years. But, this is mainly because the stock boomed over 600% during the peak of the pandemic. In my opinion, ZIM is a classic pandemic stock. Its business surged in 2021 and 2022 so the stock soared. But, in 2023, things came crashing back to reality. As of now, there’s a good chance that ZIM is getting overly punished for its lackluster performance. 

I hope that you’ve found this article valuable when it comes to learning about the ZIM dividend. If you’re interested in learning more then please subscribe below to get alerted of new articles as I write them.

Disclaimer: This article is for general informational and educational purposes only. It should not be construed as financial advice as the author, Ted Stavetski, is not a financial advisor.