After being favorite targets of the bears during the global financial crisis, dry bulk shippers and tanker stocks booked some decent gains in 2010. While the Baltic Dry Index isn't back to its pre-crisis levels,
it can be argued that the worst is behind the sector and this group is home to some impressive dividends and yields, making it all the more compelling for yield-starved investors.
To be sure, this isn't a perfect industry. In fact, there may be some issues to deal with right now.
Although oversupply may cause consolidation, delays, and cancellations in the short term, perhaps the burst of the shipping bubble may bring positive long term results, according to Sara Grillo for Business Insider.
For those willing to take the risk, there is the second version of the Guggenheim Shipping ETF (NYSE: SEA). We say second version because an administrative snafu led to the delistment of the old Claymore/Delta Global Shipping ETF, but that fund was quickly reborn and under the same ticker no less.
SEA has gained almost 16% in the past six months and got 2011 started the right way by breaking above a downtrend line just over $28 and the chart is actually kind of attractive at this point, indicating a run to the $30 could be possible if the aforementioned near-term headwinds don't become too much of an issue.
Of course the primary catalyst for SEA's smooth sailing should be further strength in global commodities demand. If that remains the case, 2011 could be the year the dry bulk shipping sector is reborn and to make life easier, drop the stock-picking burden and sail with SEA.