Carnival Restarts Dividend Payout, but Fuel Costs Keep Stock Under Pressure

The cruise operator's balance sheet is strengthening, bookings stretch deep into 2028, and ships are sailing at 103% occupancy. Yet shares of Carnival have lost roughly a quarter of their market value since tensions with Iran flared, as rising fuel costs and broader tourism jitters weigh on sentiment. The stock's recent slide accelerated Monday, shedding 3.56% to close at $25.44, its third consecutive down day, with unusually heavy volume of 36 million shares changing hands. The price has now slipped below its 200-day moving average, a technical level that often signals caution.

Against that backdrop, Carnival reached a symbolic milestone on Wednesday: the stock began trading ex-dividend for the first time in years. Shareholders on record will receive $0.15 per share, with payment scheduled for the end of May. The payout represents a dividend yield of approximately 7%, leaving the company with ample room to reinvest in fleet expansion. The move marks a definitive step back toward normalcy after the pandemic-era suspension.

The operational picture remains robust. Revenue over the last twelve months hit $26.6 billion, generating a net profit of $2.8 billion. Advance bookings have been so strong that Carnival's fleet is effectively oversold – utilization of 103% means third-deck cabins and other flexible inventory are filled beyond theoretical capacity. Discounting is almost unnecessary, and future cruises are already being reserved into 2028. To meet that demand, the company is pressing ahead with its largest shipbuilding program in years. Princess Cruises, a subsidiary, has ordered three new liquefied natural gas-powered vessels from Italy's Fincantieri yard, with deliveries beginning in 2035. An additional seven new ships are scheduled to join the fleet in the years prior.

Should investors sell immediately? Or is it worth buying Carnival?

Fuel costs remain the biggest drag on earnings. Carnival spent nearly $400 million on fuel in the first quarter of the current fiscal year, and total fuel expenditure for the prior full year stood at $1.8 billion. The rising fuel bill is expected to pressure near-term profits: analysts forecast a decline of roughly 3% in the next quarterly report. The company's ability to offset those costs through higher ticket prices and onboard spending will be closely watched.

Wall Street, however, is not running for the exits. The 22 analysts covering the stock maintain a consensus “Strong Buy” rating, with average price targets ranging from $34 to $36. Short sellers are also backing off: the number of shares sold short has fallen 32% from a year ago to approximately 43 million shares, representing less than 4% of the float. That retreat suggests the bearish camp is losing conviction even as the stock struggles to regain its footing.

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