Ship Finance Delivers Dividend

Ship Finance International is steaming full speed ahead, never mind the torpedoes. Although the tanker company said Friday it had missed third-quarter earnings estimates, it raised its dividend, pleasing investors who had their eyes on the horizon.

Ship Finance International upped its quarterly payout to 60 cents a share from 58 cents. That came on the same day that rival Frontline (nyse: FRO - news - people ) slashed its third-quarter dividend to 50 cents a share from $2.75 and $3.00 for the first two quarters of 2008. Tanker companies pay out dividends on the profits they earn from leasing their ships on the spot market. In June and July spot, or day rates, soared to record highs, but as oil prices began plummeting so did charter rates.

Ship Finance International (nyse: SFL - news - people ) shares soared 12.2%, or $1.29, to $11.89, on Friday. Its stock, however, has tumbled 57.1% since the beginning of the year. But the company was confident, saying the crude-oil shipping and deepwater drilling markets are strong. On an annualized basis, its new payout is 20.2% at Friday's closing stock price.

With light, sweet crude oil for January delivery sinking 4.4%, or $2.38, to $52.06 a barrel, on the New York Mercantile Exchange on Friday, a sharp decline from its record-high of $147 in July, it's clear that the turmoil in the global economy is pressuring oil demand. Investors are waiting to see if the Organization of Petroleum Exporting Countries will reduce production before its regularly scheduled meeting in December. The organization has cut output for three consecutive months.

Meanwhile, Ship Finance’s earnings for the third quarter soared 130.1%, to $47.4 million, or 65 cents per share, up from $20.6 million, or 28 cents per share, in the prior year. Sales shot up 22.0%, to $114.3 million, up from $93.4 million. But it missed analysts’ expectations of earnings of 88 cents per share on revenue of $134.9 million. The company attributed the shortfall to turmoil in the international credit markets and generally softer shipping markets.

Ship Finance’s main investments are in the crude-oil shipping and deepwater drilling markets, which have remained relatively strong, the company said, explaining its positive outlook.