Sail The High Seas With A Dividend Increase From Nordic American Tanker
About: (Nordic American Tanker (NYSE: NAT), Barron's, Nordic American, Dividend Genius, dividend stock, dividend stocks, stock dividend, stock dividends, )
Oil shipping firm Nordic American Tanker (NYSE: NAT) has been a member of the Dividend Genius portfolio for a while now and since we added it to our roster, a few subscribers have asked us why the low-yielding stock, which had cut its dividend to conserve cash during the financial crisis, was included among a collection of high-yielding reliable dividend payers. Our answer was that Nordic American was among the best oil tanker stocks around and the company's free cash and non-existent debt made it a compelling opportunity.
We also thought a dividend increase may come sooner rather than later and following an upgrade by Jefferies last week and a bullish writeup in Barron's, Nordic American said on Thursday that it will pay a fourth-quarter dividend in the neighborhood of 23 cents a share. That's well above the 10 cents a share the company paid in the third quarter.
The stock was down on news that the company will sell 4 million shares to raise cash to purchase more vessels, but if a company like Nordic American is considering the purchase of new vessels, which don't come cheap, it's reasonable to expect an uptick in demand might be on the horizon. Nordic American is planning to use proceeds from the secondary offering to purchase at least four new Suezmax tankers.
Nordic American's dividend has a history of fluctuating dividends and 23 cents a share, while better than 10 cents, is still far below some of the company's other recent payouts so maybe we'll see more dividend increases out of the company as its outlook and profits improve.
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