If you kept reinvesting the dividends though instead of spending them, your quarterly dividend income would have risen to $58,000 by August 2008. For a period of 10 years, your quarterly dividend income would have increased by 373%. If you reinvested it though, your quarterly dividend income would have increased by 1873%.
The dividend payout ratio has remained between 90% and 250% since 1998. Once again the reason why the payout is above the EPS is because NAT’s management pays out distributions out of the operating cash flows, which includes certain non cash items such as depreciation expense (which is excluded from the EPS calculation).
Overall the wild fluctuations in dividends and earnings per share are something my method is not accustomed to. The tanker business is very competitive and capacity has been increased faster than demand over the past couple of years. Having the majority of the fleet on the spot market could definitely boost profitability in good years, but could also lead to poor operating performance in bad years.
One positive is that the company has low amounts of long term debt relative to its assets. I also liked the fact that the tangible book value of the stock was at $22.42 at the end of 2007.
One positive is that Nordic American Tanker has never paid a quarterly dividend per share which was lower than 30 cents/share. If I were a holder of NAT I would treat any quarterly payment as if it were only 30 cents and putting the rest in a savings account in order to smooth my dividend income.
