Typical competitor rates currently hover around $20,000 per day, while many need almost $25,000 per day. Nordic American has a natural advantage in pricing and debt, but that’s not all that makes it such a good investment.

Juicy Dividend

Currently there is a juicy dividend yield on the stock, which makes it ideal for income investors, but more importantly allows us to truly gauge how financially strong this company is. Many investing gurus consider the dividend stream the ultimate barometer of a healthy company.

The company’s dividend payments are part of Nordic American’s unique business model. Their business model combines high dividend payouts with low financial risk – no debt and unused credit lines of $500 million.

It also has an interesting policy of declaring quarterly dividends. The dividend is substantially equal to the company’s net operating cash flow during the prior quarter after reserves.

So far in 2009, the company has made dividend payments of $0.87 and $0.88 per share. Nordic American has now made dividend payments for 47 consecutive quarters which for the shipping industry is remarkable. The recent additions to the company’s fleet, paid for by stock issuance, are expected to increase distributable cash flow by 25%.

The stock of Nordic American tanker has had a rather remarkable performance, particularly if you are an income investor. The company’s stock began the century at $10.75 per share and has paid out $36.18 in dividends during the 9+ years since.

But income investors aren’t the only ones happy with this stock.

Over the past several years, the stock price for Nordic American has ranged from the low $20s to the low $40s. Currently it’s in the middle of that range, at about $32 per share. The stock has recovered from the panic low set in March at $22.41 – which was an absolute steal.

We think it has just as much potential now with the improving market conditions.

Good investing,

Tony Daltorio