Nordic American Tanker Pays Off Yet Again

Nov. 8.08 | About: Nordic American (NAT)

Nordic American Tanker (NYSE:NAT) has announced their 3rd quarter results and declared a dividend of $1.61 per share payable to shareholders of record on Nov. 21. NAT has now paid a total of $4.89 for the past 4 quarters. The company has now paid a dividend for 45 consecutive quarters.

NAT is the easiest company I know to understand and the hardest to predict results for more than a quarter down the road. Nordic American has a fleet of about a dozen Suezmax oil tankers that they contract on the spot market. It works to keep its per ship expenses very low and pass all free cash flow earnings on as the quarterly dividend. The company currently has no debt and 2 tankers on order.

It is unpredictable because revenues and the dividend fluctuate right along with the spot market rate for Suezmax tankers. Over the last few years I have seen the daily rate fluctuate from under $20,000 per day to over to $80,000 per day. NAT’s dividend has ranged from 40¢ to $1.88. For the last 4 years the dividend has averaged $1.17 per quarter.

Since we are almost half way through the 4th quarter I will predict the next dividend will come in at $1.40 to $1.50. I base my assumption on what little information NAT gives out and keeping an eye on the spot rate for Suezmax tankers.

Disclosure: NAT is a component of this site’s Income and Opportunities Portfolios and I hold the stock in my own account.