Demand for container leasing is growing as shipping companies free up capital for more core projects, preferring the flexibility that comes from outsourcing ownership of containers and not having to return containers to different ports around the world, benefiting container-leasing companies like Textainer Group Holdings (TGH), says Helane Becker, Director at Dahlman Rose & Co.
“We believe it’s cheaper to rent than to own. The leasing companies have also been in a position where they have been able to raise capital. A shipping company has its capital tied up in its new-build program, and it is much cheaper to lease containers rather than to buy them,” Becker said.
Becker has a “buy” rating on Textainer and prefers the company over its competitor TAL International (TAL), because TGH has never cut its dividend. In the past, TAL has modified its dividend to reflect economic conditions, and Becker prefers the predictability afforded on TGH‘s dividend history.
“This compares to Textainer, which has never cut their dividend. There have been quarters in which they didn’t raise the dividend but more importantly, they’ve never cut it, so that is why we always pick Textainer first. Its board is also a little more conservative than TAL’s board,” Becker said.