SFL Corporation: Could 13%-Yielding Stock Soar 100%?
May 9, 2025
SFL Corporation Adds Several Ships and $2.0 Billion in Backlog
While economic uncertainty remains both here in the U.S. and globally, and probably will for the near future, the economies in China, Japan, and India are expected to perform better than the global average. Growth in the eurozone is projected to be decent, too. And, because no country is an economic island, for goods and services to flow, businesses need to rely on shipping companies.
Whereas some shipping companies are focused on one commodity or dry bulk, in this economic environment, it’s a good idea to look at marine shipping companies that are more diversified than others. This can help them weather individual sectors that are exposed to various headwinds.
And that’s where SFL Corporation Ltd (NYSE:SFL) comes in.
Bermuda-domiciled SFL Corporation is an international marine infrastructure company that owns and controls a $4.3-billion portfolio of 80 vessels and rigs. For some marine shipping companies, less is more, but for SFL Corporation, more is more.
While many marine shipping companies specialize in specific industries, like oil and gas or dry bulk, SFL Corporation’s fleet diversity gives it legs through multiple market cycles. (Source: “Q4 2024 Results Presentation,” SFL Corporation Ltd, February 12, 2025.)
The company’s current portfolio includes 18 tankers, 15 dry bulk carriers, 38 liners, two energy assets, and seven car carriers.
Depending on the vessel, the contract duration on SFL Corporation’s shipping portfolio varies from approximately four years to eight years. This provides it with stability in both revenue and operating costs. It also helps juice the company’s reliable, high-yield dividend.
Some of SFL Corporation’s customers include Maersk, Volkswagen, Koch, Phillips 66, and ConocoPhillips.
The company’s fleet size is always in flux as it evolves to meet industry demand. In 2024, SFL Corporation took possession of several new vessels and more than $2.0 billion in fixed-rate charter backlog.
Solid Q4 Results
For the fourth quarter ended December 31, 2024, SFL Corporation reported total operating revenue of $229.1 million, down from $255.3 million in the same prior-year period. This figure is lower because it excludes approximately $9.9 million in charter hire, which is not classified as operating revenues pursuant to U.S. generally accepted accounting principles (GAAP).
SFL Corporation reported fourth-quarter net income of $20.2 million, or $0.15 per share, down from $44.5 million, or $0.34 per share, in the fourth quarter of 2023. Operating income came in at $34.8 million, down from $94.1 million in the same period in 2023.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $124.0 million from consolidated subsidiaries, plus an additional $7.9 million adjusted EBITDA from minority-owned associated companies.
The company ended the quarter with $135.0 million in cash and liquidity.
Commenting on the third-quarter results, Ole B. Hjertaker, SFL Corporation’s chief executive officer, said, “We are pleased to execute on our growth strategy, with several new vessels and more than $2 billion fixed rate charter backlog added in 2024.”
Adding, “Over the last decade SFL has transformed from a vessel financing provider to a maritime infrastructure company, with the majority of our charter backlog to investment-grade end users. This has translated into multiple repeat transactions with blue chip customers, and increases the residual value and future marketability of vessels in our fleet.”
84th Consecutive Quarterly Dividend Declared
Thanks to its reliable cash flow, AFL Corporation provided shareholders with a reliable and recently growing quarterly dividend.
In 2021, AFL stock paid $0.68 per share, with that number climbing 35% in 2022 to $0.92 per share. Its annual distribution increased an additional 7.6% to $0.99 in 2023 and a further nine percent to $1.08 per share in 2024. (Source: “Dividends,” SFL Corporation Ltd, last accessed April 28, 2025.)
Most recently, in March, it paid a quarterly dividend of $0.27 per share, or $1.08 per share on an annual basis, for a forward dividend yield of 13.35%.
Since the inception in 2004, SFL has returned $2.8 billion to its shareholders through 84 consecutive cash dividends. And in the process, it has continuously demonstrated its ability to both renew and diversify its portfolio, supporting sustainable, long-term distribution capacity.
SFL Stock Could Double From Here
Like much of the broader market, SFL shares have taken a big hit since February. As of this writing (April 28), SFL stock is down 18% year to date and 32% on an annual basis. Despite the stock being in the red, Wall Street continues to have a “Strong Buy” consensus, with analysts providing a 12-month share price target of $13.00 to $16.00 per share. This points to potential upside of approximately 62% to 100%.
Should SFL stock hit that high estimate, this would put it well above its July 2024 record high of $13.27 per share.
Chart courtesy of StockCharts.com
The Lowdown on SFL Corporation Ltd
As you can see, SFL Corporation Ltd is a great, diversified marine shipping company with highly predictable cash flow. It has a massive fixed-revenue backlog of $4.3 billion of which more than $2.0 billion was added in 2024 alone. The majority of its charter backlog is owned to investment-grade end users.
The company’s outlook for the next 12 months remains robust, with analysts predicting that SFL stock could rally anywhere from 62% to 100%. While there’s no guarantee of gains, it does show that Wall Street is bullish on SFL Corporation.
That’s good news for the 268 institutions that hold 32.31% of the company’s float. Some of the biggest holders include BlackRock Inc, State Street Corp, and Bank of New York Mellon Corporation. (Source: “SFL Corporation Ltd. (SFL),” Yahoo! Finance, last accessed April 28, 2025.)
It should also be noted that an impressive 25.88% of all outstanding SFL shares are also held by insiders. This kind of skin in the game should motivate management to ensure that SFL Corporation and its stock perform well over the long run.
