DryShips Inc. (NASDAQ:DRYS) has surprised the market with its announcement of a new dividend policy that will see shareholders receive a regular fixed quarterly dividend of $2.5 million. DRYS even flirted with the possibility of additional dividend above the fixed amount, depending on market conditions and financial performance. But depending on your perspective of DRYS this dividend policy can signify very different scenarios.

The Dividend

The announcement stated that for the fourth quarter of 2016, a total dividend of $2.5 million will be paid to the owners of the shares as at March 15, 2017. The actual dividend will be payable around March 31, 2017 with the exact amount of the dividend per share to be determined based on the number of shares on March 15. At Feb 7, the company had 36.5 million shares outstanding which equates to a dividend payout per share of $0.07- although this payout could be drastically reduced if the shares undergo a further dilution before March 15.

Where Is the Money?

The company is not generating any cash flow. In fact, in the last quarter DryShips reported minus $14.7 million in adjusted EBITDA (earnings before interest, tax, depreciation and amortization) for its core dry bulk business. While DryShips is on the way to diversifying into the gas carrier market with the option to purchase four Very Large Gas Carriers for $334 million from private entities controlled by the CEO. One of these four options has now been exercised however the gas carrier will only be delivered in June. The result:DryShips will be paying instalments for the gas carrier which will only reap rewards later in the year.

The Bulls and the Bears

Bulls in the market believe that the dividend policy indicates that DRYS has finally decided to stop its multiple share dilutions and capital raises that have sucked value from the company. This would take some of the momentum from investors who have been busy shorting the stock as prices have dropped by an incredible 99.7% in the past year. Most recently, prices tanked by 64% following an 8-to-1 reverse split in late January.