Tomorrow marks the 219th anniversary of a significant event that profoundly influenced Britain’s relationship with Europe, even more so than the Brexit vote. While the Battle of Trafalgar may not be prominently celebrated in schools today, every ship in the Royal Navy honors the occasion on October 21, representing a historical period when Britain commanded the seas.

In the current investment landscape, it’s noteworthy that over 80% of global trade is conducted via maritime transport. Numerous companies within this sector have shares available on the London Stock Exchange. Investors can play a pivotal role in funding the shift towards low-carbon renewable fuels as alternatives to conventional bunker oil. Moreover, shipping stocks often provide substantial dividend income and opportunities for capital appreciation worldwide.

One company to look at is Ocean Wilsons (ticker: OCN), a Brazilian enterprise specializing in ports, shipyards, and towage. The company’s shares have seen a remarkable increase of 53% over the past year while continuing to offer a dividend yield of 4.6%. With a market capitalization of £512 million, the shares are valued at less than 11 times their earnings.

This price-to-earnings ratio appears appealing, especially when independent analysts from the London Stock Exchange Group highlight that Ocean Wilsons boasts a gross profit margin of an impressive 93%. After accounting for expenses, the net profit margin stands at 18%, alongside a return on investment of 8.7%. Established in 1837, the company recently announced discussions regarding the potential sale of significant assets.

This announcement led to a spike in share prices; however, for investors seeking deals, it’s worth noting that Ocean Wilsons’ largest shareholder is the Hansa Investment Company (HANA), which Morningstar estimates trades at a 42% discount to its net asset value (NAV).

Approximately 30% of Hansa’s £470 million assets are invested in Ocean Wilsons. Furthermore, Hansa’s holdings comprise over a quarter of Ocean Wilsons’ total market value. Hansa, listed in London since 1912, has delivered total returns of 48% over the past decade, with 32% over five years and 29% in the previous year, although it offers a modest dividend yield of 1.4%.

For those open to exploring international options, higher yields can be found in shipping stocks from other countries. Hapag-Lloyd (HLAG) from Germany and Maersk (MAERSKB) from Denmark rank among the largest shipping companies globally, with market values of €25 billion (£21 billion) and 157 billion Danish krone (£17.6 billion) respectively, yielding 6.3% and 4.9%.

Concerns about an economic slowdown impacting international trade negatively affected both companies last year, resulting in share price drops of 5% for Hapag-Lloyd and 14% for Maersk. Nonetheless, both firms have remained positive over five years, achieving returns of 156% and 29% respectively.

A challenge investors face is navigating withholding taxes on European foreign dividends, which can complicate returns. Conversely, investment trusts listed in London simplify both tax management and professional stock selection within this niche sector.

Taylor Maritime Investments (TMI) currently yields a dividend of 7.9%, while Tufton Oceanic Assets (SHPP) offers a yield of 7.6%. Taylor, with total assets amounting to £503 million, and Tufton, boasting £420 million, reported returns of 27% and 46% over the past year. Despite this performance, both trade below their NAV, with discounts of 33% and 14% respectively.

There’s no certainty that these discounts will narrow; they may instead widen. Additionally, dividend payouts are not guaranteed and could be reduced or eliminated at any time.

Another apprehension is the potential reversal of globalization trends that have fostered international trade growth in recent decades, influenced by rising nationalism and protectionism. Recently, U.S. presidential candidate Donald Trump reiterated threats to impose tariffs on imports, including a 20% tax on most goods and a 60% tax on those from China, stating, “To me, the most beautiful word in the dictionary is tariff.”

While this perspective is far from universally accepted among economists, Morningstar indicates that Tufton has increased its shareholders’ income by an annual average of 5.7% over the last five years. In contrast, the Taylor Maritime Investments was established in 2021 and lacks a comparable performance history.

My initial investment in Tufton was motivated by its attractive dividends, purchasing shares at 86p in August 2021. The share price reached £1.02 on Friday, and I appreciate holding them in my Isa account, where income and capital gains are tax-free.

Unfortunately, I may have missed the opportunity with Ocean Wilsons. Hesitating to invest may have resulted in missing my chance now that the share price has surged. It seems this vessel has sailed.

Though I could be mistaken, Shakespeare’s words ring true: “There is a tide in the affairs of men / Which, taken at the flood, leads on to fortune; / Omitted, all the voyage of their life / Is bound in shallows and in miseries.” Times like the present require taking advantage of favorable conditions to realize one’s investments.

On a positive note, we wish fair winds and smooth sailing for Sir Ben Ainslie and his crew as they embark on their America’s Cup journey, further enriching our maritime narrative. I once had the privilege of sailing with Ben before his rise to fame; he is genuinely commendable.

Shipping significantly contributes to the global economy yet remains overlooked in many investment portfolios. Investors may want to consider this sector, as it represents an essential industry with lasting potential.

Investing in the British Pub Scene

Amid discussions about English exceptionalism, several unique features distinguish this country, particularly its iconic pubs. During my travels through emerging markets in the ’90s and 2000s, I visited many establishments, from Buenos Aires to Shanghai and Cape Town to Moscow, yet nothing compares to our local pubs, where investment bankers and unconventional characters often share space at the bar.

Regrettably, pubs face challenges that frequently lead to closures. Increasing taxes coupled with declining interest from younger demographics resulted in the closure of 500 pubs last year.

Nevertheless, some establishments are innovating to attract customers. Fuller Smith & Turner (FSTA) has been proactive; despite buying shares at £9.42 in March 2018 only to see them dip to £7.48, their strategy is yielding benefits.

In addition to a cash payout of £1.25 per share from the sale of its west London brewery, the company offers a 2.9% dividend yield, providing some restoration to my investment. They also provide a perks card that grants 15% discounts on most bills for shareholders owning 1,000 shares.

Furthermore, creative entertainment options, including opera and theatre in pub gardens, partnerships with local sports teams, and even a Trafalgar dinner at their flagship pub, the Admiralty in Trafalgar Square, demonstrate their commitment to community engagement. Cheers!

Disclosure: Ian Cowie’s shareholdings