Earlier this year, the trust built a 26.6pc stake in Grindrod Shipping, a US-listed shipping business, at an average price of $17.64 per share. Today, its share price stands at $20.27, following a record second quarter and the management team believes the business still looks undervalued.
Although Taylor Maritime’s portfolio yields more than 20pc, the trust’s headline dividend yield stands at 5.8pc – a level that Peter Spiller, who holds the fund in his Capital Gearing Trust, believes is prudent. It also means there is scope to pay out more special dividends, with the most recent payment in May this year.
“They are wise to keep the dividend reasonably modest and well covered, given they are operating in a cyclical market,” he says. “This means they will be able to sustain it if times get tougher.”
Investors can buy into the trust via the dollar or sterling share class. This will come down to personal choice and expectations for sterling versus the dollar, given the underlying assets are dollar-denominated.
Although the market is anticipating a decline in Taylor Maritime’s NAV, caused by a potential economic downturn, we don’t believe this will be the case. Historically, handysize bulk carrier ships have been a resilient area of the market – and we see no reason for this to change.
Given that Taylor Maritime trades on a 17pc discount and is supported by positive dynamics, it could well be time to consider dipping your toe into the water.
Questor says: buy
Ticker: LON:TMI
Share price at 6pm: $1.44
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