SFL Corporation: An Attractive Dividend Yield Of 9.53%

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SFL Corporation Ltd. (NYSE: NYSE:SFL) released its fourth 4th 2022 results connected February 15, 2023.

Note: This article is an update of my article published connected November 15, 2022. I person followed SFL's quarterly Seeking Alpha results since Sept. 2014.

1 - 4Q22 Results Snapshot

SFL Corporation Ltd. reported a quarterly income of $0.36 per diluted stock compared to $0.63 per stock successful nan aforesaid 4th a twelvemonth ago.

It was different beardown 4th for SFL Corporation Ltd. pinch a caller grounds successful revenues. The company's full U.S. GAAP operating revenues connected a consolidated ground were $197.82 cardinal successful 4Q22, compared to $152.06 cardinal successful nan erstwhile year's quarter.


SFL 4Q22 Highlights (SFL Presentation)

Note: This fig is little than nan rate received arsenic it excludes revenues from charter hire, which are not identified arsenic operating revenues U.S. GAAP. More specifications later successful this article. The rate revenues received successful 4Q22 were $209.62 million.

The institution increased its quarterly dividend to $0.24 per stock this quarter. The dividend output is now 9.53%.

Adjusted EBITDA connected a consolidated ground was $135.36 cardinal (including nan 49.9% owned associated companies), up from $121.30 cardinal posted nan aforesaid 4th a twelvemonth ago.

According to nan property release:

As of December 31, 2022, and adjusted for consequent transactions, nan estimated fixed complaint charter backlog from nan Company’s fleet of 77 wholly aliases partially owned vessels and caller buildings nether building was astir $3.6 cardinal pinch a weighted remaining charter word of 6.6 years.


SFL Backlog and fleet position (SFL Presentation)

The backlog is down somewhat this quarter, but still astatine a patient level.


SFL Quarterly Baclog history (Fun Trading)

2 - Investment Thesis

I americium a semipermanent SFL shareholder and person trusted nan institution done bully times and uncertain times. However, moreover successful nan astir challenging situation, guidance could support a high-level distribution to shareholders.

CEO Ole Hjertaker said successful nan property release:

we person continuously demonstrated our expertise to some renew and diversify our portfolio of assets and charters, supporting a sustainable agelong word distribution capacity.»

A awesome advantage for investors is that SFL is not excessively circumstantial and tin accommodate faster than a institution focusing connected a smaller niche. When a business conception is not performing well, nan institution tin quickly displacement to different business and adapt. We person seen it playing pinch Seadrill, for example. Every unreality has a metallic lining, and guidance has done great.

Versatility is important successful nan shipping business and gives nan institution capable clip to modify its business exemplary while maximizing early profit.

Thus, nan finance thesis continues to beryllium nan aforesaid arsenic my preceding article, and I urge SFL arsenic a semipermanent investment.

However, I propose trading short-term SFL utilizing astatine slightest 30% of your full position to afloat profit from this volatile and ever-changing industry. This two-level strategy has prevailed successful my marketplace, "The Gold and Oil Corner," and I judge it is nan astir rewarding.

3 - Stock Performance

I mostly comparison SFL to 3 different companies I travel connected Seeking Alpha. Teekay Tankers (TNK), Scorpio Tankers (STNG), and Frontline plc (FRO). However, this comparison is not wholly meticulous because they are axenic Tankers companies and are not wholly comparable pinch SFL, which owns a tankers fleet representing 22% of its full fleet.

This quality explains why SFL is underperforming nan Tankers group, particularly Teekay Tankers and Scorpio Tankers, up 284% and 244%.

SFL banal is up 19% connected a one-year basis.

ChartData by YCharts

SFL Corp.: The Raw Numbers: Fourth Quarter Of 2022 And Financials History

SFL 4Q21 1Q22 2Q22 3Q22 4Q22
Total Revenues successful $ Million 152.06 152.39 153.30 166.89 197.82
Net Income successful $ Million 80.12 47.02 57.41 49.89 48.45
EBITDA $ Million 148.52 117.10 131.91 77.73 n/a
Adjusted EBITDA successful $ Million 121.30 119.01 123.57 125.58 135.36
EPS diluted successful $/share 0.63 0.37 0.45 0.37 0.36
Operating rate travel successful $ Million 91.50 81.51 85.20 79.92 108.50
CapEx successful $ Million 146.80 186.74 8.12 179.16 228.48
Free Cash Flow successful $ Million -55.30 -105.24 77.08 -99.25 -119.97
Total rate $ Million






Long-term indebtedness successful $ Million 1,889 2,026 1,964 2,025 2,101
Dividend per stock successful $ 0.20 0.22 0.23 0.23 0.24
Shares outstanding (Basic) successful Million 128.79 126.79 126.79 137.48 138.60

Source: SFL release.

Analysis: Revenues, Earnings Details, Free Cash Flow, And Backlog Discussion

1 - Operating revenues were $197.82 cardinal successful 4Q22

1.1 - Revenues and others


SFL Quarterly Revenues history (Fun Trading)

Operating revenues were different grounds of $197.82 cardinal compared to $152.06 cardinal successful nan aforesaid 4th a twelvemonth agone and up from $166.89 cardinal successful 3Q22.

SFL Corp. received a charter prosecute of astir $209.62 cardinal from nan Company's vessels and rigs, including $11.80 cardinal successful Gain connected nan waste of assets and termination of charters.

CEO Ole Hjertaker said successful nan Q4 property release:

SFL is pleased to denote yet different beardown quarter, pinch maturation successful some revenues and EBITDA. Throughout 2022, we person continued building our portfolio done a operation of caller agelong word charters connected existing vessels and caller acquisitions, expanding our fixed complaint charter backlog to astir $3.6 billion.

The institution had $48.45 cardinal successful income for nan 4th fourth of 2022, aliases $0.36 per diluted stock (estimated).

Adjusted EBITDA was $135.36 million, up 11.6% from past year.


SFL Quarterly Adjusted EBITDA history (Fun Trading)

1.2 - Highlights during 4Q22 (press release)

  • 76th consecutive quarterly dividend declared, accrued to $0.24 per stock Net profit of $48.5 million, aliases $0.38 per stock successful nan 4th quarter
  • Received charter prosecute of astir $208 cardinal successful nan quarter, incl. $6.9 cardinal of profit share
  • Adjusted EBITDA2 of $127.5 cardinal from consolidated subsidiaries, positive an further $7.9 cardinal adjusted EBITDA from 49.9% owned associated companies
  • Four caller vessels delivered during nan 4th quarter, each pinch agelong word charters to starring bluechip customers
  • Agreed waste of a 2009-built Suezmax crude lipid tanker pinch expected transportation successful nan first quarter

Note: root property release.

1.3 - The quarterly dividend is up to $0.24 per stock successful 4Q22, an summation of 4.3% sequentially.

It is still a humanities debased for nan company, but we spot definitive advancement connected this side, pinch a output now of 8.85%.


SFL Quarterly Dividend history (Fun Trading)

2 - Free rate travel is simply a nonaccomplishment estimated astatine $119.97 cardinal successful 4Q22


SFL Quarterly Free rate travel history (Fun Trading)

Trailing 12-month free rate travel ("ttm") is simply a nonaccomplishment of $247.38 million, pinch a free rate travel nonaccomplishment estimated astatine $119.97 cardinal successful 4Q22.

The nonaccomplishment successful free rate travel tin beryllium explained by nan important CapEx utilized by nan institution to grow and accommodate constantly. In this case, nan nonaccomplishment is not needfully a negative. CapEx was elevated this 4th astatine $228.48 million. However, free rate travel has been underwater for 3 of nan past 4 quarters, and it starts to beryllium a spot concerning.

3 - Debt analysis: Net indebtedness is estimated astatine $1,890 cardinal successful 4Q22


SFL Quarterly Cash versus Debt history (Fun Trading)

SFL's semipermanent indebtedness (including current) is $2.10 billion, and full rate is $211.08 cardinal arsenic of December 31, 2022.

4 - Segment Analysis

4.1 - The offshore segment

SFL owns 2 HE rigs. The semisub West Hercules and nan support jack-up West Linus person been chartered to Seadrill since 2008 and 2014.

During nan 4th fourth of 2022, SFL received a charter prosecute of $18.6 cardinal of charter hires for nan rigs. In addition, SFL received a $10.5 cardinal costs relating to catch-up payments for antecedently reduced charter prosecute from Seadrill during Chapter 11. The semi-submersible rig Hercules will acquisition its scheduled typical periodic study successful 1Q23 and is presently being marketed for caller charter opportunities from 2Q23 onwards, which will beryllium an easy task. The costs of nan SPS is estimated astatine $50 million.

4.2 - SFL barren bulk segment

The Company has 15 barren bulk carriers, of which 8 were employed connected semipermanent charters successful nan quarter.

SFL generated astir $23.7 cardinal successful gross charter prosecute from nan barren bulk fleet successful nan 4th quarter, including a astir $0.4 cardinal profit share. The 7 vessels employed successful nan spot and short-term marketplace earned astir $9.0 cardinal successful nett charter prosecute during nan 4th quarter, compared pinch astir $10.2 cardinal from six vessels successful nan erstwhile quarter.

4.3 - Tankers segment

SFL has a fleet of 18 crude oil, product, and chemic tankers, including announced transactions, pinch nan mostly employed connected semipermanent charters. The vessels generated astir $49 cardinal successful gross charter prosecute during nan quarter.

SFL had 2 Suezmax tankers and 2 chemic tankers trading successful nan spot and short-term charter market. These vessels earned nett charter prosecute of astir $12.1 cardinal successful nan 4th quarter, compared to astir $11.5 cardinal successful nan 3rd quarter.

In 4Q22, nan Company completed nan acquisition of 4 modern Suezmax tankers successful operation pinch six-year clip charters to a subsidiary of Koch Industries, adding astir $250 cardinal to SFL’s fixed-rate charter backlog.

After nan 4th ended, SFL agreed to waste a 2009 built Suezmax tanker for a nett income value of astir $39 million.

4.4 - Liners segment

SFL has a liner fleet of 36 instrumentality vessels, including announced transactions and 7 car carriers, of which 4 are nether construction.

The liner fleet generated astir $99 cardinal successful gross charter prosecute successful nan quarter. Roughly $6.5 cardinal of nan prosecute was a profit stock from substance savings.

As of December 31, 2022, nan estimated fixed-rate charter backlog from nan wholly and partially owned liner fleet was astir $2.4 billion, pinch an mean remaining charter word of astir 4.5 years aliases 7.3 years if weighted by charter hire.

Technical Analysis (Short Term) And Commentary


SFL TA Chart short-term (Fun Trading StockCharts)

Note: The chart has been adjusted for nan dividend.

SFL forms an ascending transmission shape pinch guidance astatine $10.75 and support astatine $9.95.

Ascending transmission patterns aliases rising channels are short-term bullish successful that a banal moves higher wrong an ascending channel, but these patterns often shape wrong longer-term downtrends arsenic continuation patterns. The ascending transmission shape is often followed by little prices,

The wide strategy I regularly beforehand successful my marketplace, "The Gold And Oil Corner," is to support a halfway semipermanent position and usage astir 35% to waste and acquisition LIFO while waiting for a higher last value target aliases bask a dividend output of astir 9.53%.

The trading strategy is to waste 35% betwixt $10.65 and $10.80 pinch higher guidance astatine $11.25 and hold for a retracement betwixt $10 and $9.7 pinch little support astatine $9.25.

Warning: The TA floor plan must beryllium updated often to beryllium relevant. It is what I americium doing successful my banal tracker. The floor plan supra has a imaginable validity of astir a week. Remember, nan TA floor plan is simply a instrumentality only to thief you adopt nan correct strategy. It is not a measurement to foresee nan future. No 1 and thing can.

Author's note: If you find worth successful this article and would for illustration to promote specified continued efforts, please click nan "Like" fastener beneath arsenic a ballot of support. Thanks.

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