An Interesting Investment Play For People Who Take Cruises

If you cruise, and will cruise again, cruise line shares are cheap – and shareholders get folio credit when they take trips. A reader passes along that at current prices they get an effective 6% dividend annual when they take a 7 night cruise.

Just over a year ago I bought 100 shares, each, of CCL (which includes Carnival, Holland America, Royal Caribbean, and others) and of NCLH (NCL). I did not do so because I thought I was so wise as to be able to “beat the market”. Rather, having 100 shares on either entitles me to a $100 per cabin shipboard credit when I take a 7 day cruise on either conglomerate.

As you can imagine, I have gotten shellacked – but I invested no more than I could lose and its part of the “long game”.

Just now, 100 shares of CCL is about $1600 and 100 shares of NCL is $1700. I will not specuate where the prices will go, but a $100 shipboard credit now represents a 6% tax free dividend each time you use it.

Here’s the NCL offer which you can use as often as you cruise:

$250 Onboard Credit per Stateroom on Sailings of 15 Days or More.
$100 Onboard Credit per Stateroom on Sailings of 7 to 14 Days.
$50 Onboard Credit per Stateroom on Sailings of 6 Days or Less.
Offer valid for any cruise vacation on Norwegian Cruise Line®, Oceania Cruises® or Regent
Seven Seas Cruises®, excluding charter sailings.

Here’s the carnival offer which you can also use as often as you cruise and is similar in value.

My guess is that current volatility outweighs the shipboard credit, that a 6% annual dividend for once a year cruisers looks great in the pre-COVID19 era with a stable blue chip stock. You wouldn’t invest in a volatile tech stock because of that, and cruise lines don’t have the same long term growth potential of the best tech plays (but could well be oversold, I leave that to you).

However for someone taking 3 or more cruises per year you’re really just betting that the cruise line stays solvent.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. I bought 1000 charges of Carnival at 9.10 last week. Sold 2 days ago at $18.72. They can keep the shipboard credit.

  2. I totally did this – well, I already had 100 shares of Carnival but decided to add in order to…um, I think it’s called “dollar cost averaging”? And I have an 11-day Norwegian cruise booked for November, so it seemed a reasonable play. I guess we’ll see.

  3. I bought my RCL stock at 8 bucks a share during “The Great Recession” when no one was ever going on vacation…ever….again or so I was told. I obviously did well with it as an investment (which was my goal) having seen it shoot up as high as 130ish a share…maybe more. I sold some along the way but held on to the rest. The onboard credit wasn’t a goal, more of a side benefit, that I sometimes was successful in using.

    I’m sure the ships will set sail again at some point, but I’m not convinced we’ve hit bottom of market for cruise line stocks. I’m not buying any additional shares (in cruise lines) for now.

  4. It could be a year or more before we see cruises again…I would not bet on any of these stocks anymore.

  5. Similar to this, ANA and JAL offer 50% discount coupons for shareholders, applicable for domestic routes. As such before JL’s bankruptcy in 2008 their stocks were very stable, defensive as they were mostly owned by individual investors who hold the stocks for the purpose of getting these discount coupons.

  6. Judy is correct. Carnival and Royal Caribbean are not affiliated.
    Gary- does Royal Caribbean have the same offer?

  7. Yes, RCL has the same benefits for shareholders of at least 100 shares. We have used it many times on our Azamara cruises. Great benefit that just keeps on giving!

  8. @Ryan, what were you planning on doing with the shares you bought last week? Not to be unkind, but I don’t think cruise stocks are going up anywhere in the near future and it would have been better to hold onto them (if you had already made the purchase) until the future. The. “Buy high, sell low” strategy is the easiest way to lose money on stocks…

  9. I actually bought RCL at 20 rode it up to 40 and now it’s on its way back down. I’m not rich by any stretch but if I lose I lose. I’m willing to take that chance. It’s a quality run cruise line.

  10. Hi Gary. Here is my investment in Viking Cruises. Our Rhine River cruise was canceled by Viking. They offered our choice of a straight-out 100% refund or a cruise voucher good for 24 months at 125%. We took the voucher and our 25% returned got us $1,500.00 USD. The easiest money that I ever made.

  11. Every time we’ve cruised on Viking Ocean we’ve gotten sick. Twice I went from the ship to the hospital with pneumonia. Their policy of shared serving pieces at the buffet is a sure way to get everyone sick.

    We no longer cruise on Viking.

  12. @Jake.. I was happy to make $7200 in one week (after taxes) and thought the stocks could end up completely dead. Cruises may not happen again for all we know.

  13. Gary, sorry for digressing with a lengthy explanation/ opinion:

    @Jake: I wouldn’t be so sure on that. There are going to be many more programs to support business of every stripe , according to a major , well-connected law firm that explained the CARES Act.
    I think the best play is to buy companies in Asia & Australia , and convert to their currency, as it looks like the US won’t allow a Great Depression , and will just keep issuing debt and buying it.

    The Fed said Tuesday it will buy corporate and municipal ETF’s. They didn’t have to actually do this as traders bid the ETF’s from a 5% discount to NAV to a 5% premium, and then there’s an arbitrage: Buy the bonds and short the ETF.
    Front-running the fed, you could buy 1 year AAA munis at 3%. I only wish I had cpurchase a lot more 5-10 year munis at 3.5 -4%

    My trading advice: Get as much low rate debt as possible in dollars and invest it in foreign currencies. The Australian dollar has already rallied 12% from a very low level.

    Banks are going to make a boatload on the new PPP and EIDL programs (the CARES Act) because there are high fees they can charge the government, not passed to borrower, and almost no underwriting.

    Will the market go back up? Probably not much, but consider if we devalue our currency rapidly, the market will go up proportionately. An example is when Switzerland severed it’s peg to the Euro and let it float. The Swiss franc became much more valuable but the stock market there went down 10% instantly.

    Note that none of this action–which will have to be repeated in a few months, will be good for most corporate profits.
    Demand and supply are very sticky at lower levels.

    CONGRESS HAS FINALLY SOLVED THE WEALTH GAP. The current course will make the poor and unemployed wealthier by giving them money –and I’m not making a value judgment as a family has to eat and a small business has to operate, while simultaneously devaluing the wealth of savers.

    I haven’t a clue what happens next as the possible permutations are innumerable.

    What I do know is the one thing I learned in the real estate /financial crisis: No matter the value of my house, the number of square feet didn’t change.

    Perhaps investments similar to real estate (I have no idea what ) are where to put money.

  14. So do you have to own 100 shares to get the onboard credit and if so do you get for each caving you book and how do you Go about getting the credit?

    Thanks

  15. @Ellen, I haven’t done this yet and was too late to get CCL stock when it was very low (around $8 the other week). I’m mainly in it to get the credit long term since I cruise with Carnival a lot. It looks like (at least for Carnival) that you need to mail/fax in your reservation information along with proof that you own at least 100 shares of stock. The main problem I see in the fine print seems to be that you only get the credit if it’s not a reduced-rate fare which I’m not sure includes promos. If it doesn’t, then it’s a no brainer for me.

  16. @Ellen,

    You can google Carnival shareholder benefits and you will get a link that leads to a PDF file, then you can read on the details.

    Seriously, google is anyone’s friend if anyone has a question on anything, almost.

    In practice, CCL shareholder credit is much easier to use than RCL’s. RCL and Celebrity, EXCLUDES shareholder benefits if your fare booked is “too low” as they call the shareholder OBC as a “coupon” instead of a shareholder benefit.

    It boils down to, either you book the on sale cruise but not getting the shareholder “coupon” value, or you book much inflated cruise but getting the pitiful $100 to $250 “coupon” value. The math is yours to figure out, depending on the way you book your cruises.

    I am saying the above with the experiences of taking over 40 cruises, mostly Holland America and Princess (CCL brands) as well as Royal Caribbean, Celebrity, Crystal. Only 1 Carnival cruise though as we dont like the brand. But its other brands, except Costa, are fine.

    Hats off to Ryan on catching the bottom then selling it at the high. Yes, they can keep the OBC – you have doubled your “investment” in less than a week – who cares the 6% OBC return.

  17. Being a travel agent as a side gig I might add that shareholder benefits are great and a good value for those with 100 shares or more on most of the cruise lines, however… you do have to file paperwork to get those benefits. Also if your travel agent has an onboard credit (OBC) special you usually have to pick between the two but not get both. For example, say I offer you that cruise you book with a $75 OBC but the shareholder OBC would be $100 you have to pick one or the other. You usually won’t get both.
    I might also add that historically Royal and Carnival are better about paying dividends to stockholders while Norweigian is noted as usually (like never) paying dividends out to stockholders. Which to me makes NCL the lesser investment overall. I just bought more shares of Carnival last week at about $9 a share, I doubt you’ll see it lower. My wife has a standing buy order for NCL at $5.50 on speculation that it would sink that low on some random day but hasn’t hit that yet.

  18. It may take a year or more but cruising will be more popular than ever. It’s the best way for seniors to vacation and we are the ones with the $$.

  19. Carnival includes Carnival, Costa, Princess, Cunard, and Holland America. If you own 100 shares, you get anywhere from I think a low of $50 to up to $250 of shipboard credit. The amount depends on the length of your cruise. 7 nights to 13 gets you $100, 14 or over gets you $250. Carnival reserves the right to discontinue the program every year, but it’s been in place since I bought stock in 2007.Ive never had a cruise where I did not get credit, and I usually get $500 of credit a year.

  20. I feel that cruise line stocks will drop significantly again. There is currently, another Holland America ship stuck off Panama. The whole image of being stuck on a cruise ship will pervade the American consciousness for awhile

    Kinda sad, as I love cruising. I was travel agent as well. Been on 40+ cruises. But this whole virus will make things difficult for cruising for well over a year. Meanwhile those ships will sit somewhere earning those companies no money.

    As long as the so-called leaders dicker about what to do next, the economy will suffer. If they had been paying attention in January, it would not be this bad. Less people would be getting sick and dying. But things will get definitely worse with this virus before they get better and the economy will follow.

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