A lack of ships and the necessity to take longer voyages to avoid the danger zones in the Strait of Hormuz and approach to the Suez Canal have created buoyant conditions for Tufton Assets (SHIP).

The £364m dollar-based shipping fund reported net asset value (NAV) rose 19% in the year to 30 June with its 21-strong fleet delivering a 28.3% total investment return with quarterly dividends included. 

“This increase was primarily driven by an unrealised increase in vessel values as the product tanker and bunker market strengthened,” said chair Rob King.

The nine-year-old investment company, which specialises in mid-size tankers and bulkers, lifted its dividend target for a fifth time in June, saying it would raise its intended payout by 10% to 11 cents a share from November. 

This followed a record quarter in which NAV jumped 13% in the three months to 30 June in response to rising charter rates exacerbated by the US war on Iran. 

King was confident on the outlook saying on average the company’s ships were chartered for 0.8 years and the investment manager was “cautiously optimistic” that the eleven ships likely to come up for charter renewal this year would increase their yields. 

Three new ships joined the fleet in April and started operating at 12% yields, he said, by way of example.

Our view

Richard Williams, senior analyst at QuotedData, said: “SHIP’s strong rebound from a difficult FY25 was not only down to strengthening product tanker and bulker markets but active management played an important role. SHIP sold a gas tanker (Neon) above NAV and recycled the proceeds into two Handysize bulkers at 85% of depreciated replacement cost, which were already valued 10% above their purchase price by year end, while higher charter rates have boosted income elsewhere in the fleet. With 11 vessels due for charter renewal later this year, current market strength could feed through further into earnings, while the 10% dividend increase looks well supported by forecast 1.9x cover.”