Founded in 1972, Carnival has since grown into the world’s largest cruise line. In 2019, their gross profit was $20.8 billion, a number that has been steadily growing over the past decade. However, disaster hit Carnival Cruise Lines (CCL) in 2020 when the COVID-19 pandemic put a temporary halt on the tourism and cruise ship industry. Investors have been debating whether or not Carnival stands a chance at returning to its former glory.
Many of the interested viewers have been wondering, “Does Carnival Cruise LInes Pay A Dividend?” Although Carnival has historically paid quarterly dividends, they have temporarily put a halt to their dividend payout and stock re-investment programs. In an effort to cut costs and focus on revitalizing their company, Carnival Cruise Lines are no longer awarding dividends to shareholders.
While this news may come as disappointing to some, it may also be a good thing, depending on how optimistic you are about the company’s future. In today’s article, I’m going to discuss some of the essential information that you need to know if you’re considering investing your money into Carnival and if the cruise line will ever have a chance of returning to its former glory.
Investing In Carnival Cruise Lines: What You Need To Know
Although 2008 through 2014 were rough years for the cruise line (thanks to the economic impact of the 2008 housing crisis), the company managed to pull through and turn a relatively consistent profit in the following years. Between 2016 and 2019, Carnival’s revenue was higher than it had ever been, and 2019 was one of the cruise line’s most profitable years ever.
Since they were doing so well, the company decided that it was a perfect time to release four massive new ships to sea. At any other time, this would have been one of the smartest moves that the company could make. However, when the Coronavirus hit the world in February and March of 2020, international travel (and even state-to-state travel) was completely halted.
This meant that all of the money the company had invested in their ships and growing forward was wasted. Even though some of the travel restrictions have since been reduced and/or lifted, there’s still strong resistance to the idea of a cruise ship or setting sail in a large, confined boat where the virus can quickly spread among crew and passengers. This was the case in 2020 when an entire cruise ship was placed on quarantine, and passengers were not allowed to leave the ship for weeks!
As you can see, the future doesn’t exactly look peachy for Carnival Cruise Lines. However, they are the largest cruise line globally, and they’ve managed to survive when numerous other smaller cruise lines went out of business. Below, I’m going to share some numbers and explain exactly what Carnival is doing to try to make a strong comeback!
Carnival Cruise Lines Cancels Dividend Payouts And Stock Re-Investment Plan
In February 2020, Carnival gave out its last dividend payment and hasn’t given out another one yet. As soon as the pandemic came and disrupted global trade and travel, the board of directors knew that they were going to have to make some substantial changes if they were to ever have a hope of returning to business as usual.
At the beginning of their second quarter, the cruise line announced that they would be canceling dividend awards and its stock re-investment plan until further notice. While this may seem like a bit of a bad thing, it’s actually a good sign. By taking such drastic action to cut costs and devote themselves to restructuring, many view it as a positive sign that they’re taking matters seriously and have plans of revitalizing the business.
What Was Carnival’s Most Recent Dividend Payout?
The last dividend payout in February 2020 was $.50 cents per share. This was the same dividend that had been paid out throughout 2017-2019. Prior to that time period, dividend payouts were usually between $.25 cents per share and $.45 cents per share, depending on the profit that the company’s latest quarterly statement.
The Future Of Carnival Cruise Lines
So, will CCL ever be able to rise out of the depths and once again dominate the oceans? Some say yes, while others have their doubts. The financial models do show a slight recovery as the company has managed to get rid of some of its lines, reduce the number of employees, and simplify its business model.
Although the vaccination process has been going slowly, many nations are on track to have their entire populations vaccinated by 2022. The government has already started to loosen restrictions and regulations against air travel for those who have been vaccinated, so it’s not a far stretch that cruise line travel could do the same.
In fact, with more remote working opportunities, the general populace may have even more reason to travel because they won’t have the same restriction of having to show up at an office every day.
Steps Carnival Is Taking To Stay In Business
Here are some of the current steps that Carnival Cruise Lines (CCL) is taking to stay in business and restructure the company.
In 2020, Carnival sold 18 ships. That was 12% of their entire fleet. Most of the ships they sold were the boats that were aging and old. Instead, CCL decided to focus its attention on some of the brand-new and newer model cruise lines that they had previously invested in.
Cutting Operation Costs
By getting rid of some of their fleets, CCL has also reduced the need for much of its standby crews, repair centers, and ticketing centers. They’ve focused on growing the business’s profitable aspects while cutting away the parts of the business that weren’t doing quite as well post-COVID.
Should You Invest In Carnival Cruise Lines In 2021?
Investing in Carnival Cruise Lines is certainly a risk. Although all stocks do come with some basic risks, investing in a cruise line that almost went bankrupt overnight is a considerably higher risk. However, if you’ve done your research, analyzed the market, and believe that CCL can rise again in the next few years, then CCL could turn out to be a fairly profitable investment.