Analyzing Nordic American Tankers’ Current and Future Dividend
Nordic American Tankers' 3Q15 Results: Assessing the Future
Cash flow
Nordic American Tankers’ (NAT) operating cash flow in 3Q15 was $49.1 million—compared to $54.5 million in the previous quarter and $21.7 million in 3Q14. The operating cash flow in the third quarter fell after a consistent rise in the previous three quarters.
Dividend
Nordic American Tankers claims to have a unique business model with a high dividend payout and low financial risk. The company has a long history of dividends. It paid dividends for 73 consecutive quarters. It declared a cash dividend of $0.38 per share on October 14, 2015. It will be paid in 4Q15. The last dividend amounted to $0.40 per share. After a rise in dividends for five consecutive quarters, there was a lower dividend in 3Q15.
Future dividends
The company has two newbuilds scheduled for delivery in 2016 and 2017. The company stated that it hasn’t planned equity issuance to fund these newbuilds. Equity issuance reduces the per share dividend amount. In the future, the company claims that it seeks to increase its dividend and earnings capacity through more expansion.
Dividend yield
Nordic American Tankers’ dividend yield ranged from 6.3%–8.6% in the past four quarters. It has one of the highest dividend yields in the industry. The dividend yields for other crude tankers are:
DHT Holdings’ (DHT) dividend yield is 3.6%
Teekay Tankers’ (TNK) dividend yield is 1.7%
Tsakos Energy Navigation’s (TNP) dividend yield is 2.4%.
Frontline (FRO) doesn’t give dividends
Investors who are interested in broad exposure to industrials can invest in the SPDR Dow Jones Industrial Average ETF (DIA).
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