Nordic American Tankers: More Than A Dividend Company by Michael A. Gayed
Summary
- The U.S. recently became a net crude oil exporter for the first time since the 1940s, a positive development for companies like Nordic.
- Nordic just announced its 89th consecutive dividend.
- Triple bottom pattern suggests a run towards $7-8 area.
- Looking for a helping hand in the market? Members of The Lead-Lag Report get exclusive ideas and guidance to navigate any climate. Get started today »
There are few industries as defiantly opaque as shipping. Even offshore bankers have not developed a system as intricately elusive as the flag of convenience, under which ships can fly the flag of a state that has nothing to do with its owner, cargo, crew, or route. - Rose George
Nordic American Tankers Limited (NYSE:NAT) is a dividend company. It announced its 89th consecutive dividend in the last Q3 2019 earnings report and a positive outlook for the end of 2019 and the start of 2020.
The shipping industry is special in all regards. It is affected by so many outside factors, that predicting the success or failure of business for years ahead is often impossible. The price of oil often influenced by geopolitics, and changes in supply and demand (e.g., shale oil), different bunker prices around the world, security risks (maritime piracy, armed robbery), new environmental regulations and lack of employees - are only a few of the challenges of today's shipping industry.
With its fleet of 23 Suezmax tankers capable of moving a million barrels of crude oil each, Nordic had a busy 2019, and by November 25th, it already had over 70% of its fleet booked at an average time charter equivalent (TCE) of $34,000/day.
For 2020, Nordic is especially enthusiastic about new rules set by the International Maritime Organization (IMO) starting with January 2020 that would result in an increasing demand for the company's Suezmax tankers. But something else happened recently that puts Nordic in a position to increase its profitability next year and beyond - changes in the U.S. trade balance in crude oil and petroleum products.
One of the recent Lead-Lag Reports I wrote pointed out that the U.S. has become a net oil exporter for the first time since the 1940s.
Oil exports from the United States have a tremendous impact on Nordic's business. With those on the rise, the company expects increased crude oil volumes and longer sailing distances - something Nordic hopes to form the base for increased future dividends.
While paying a dividend, Nordic continues to lose money - it recorded a loss of a little over $23 million for the first nine months of the year, mainly driven by costly financing arrangements for its fleet.
...Read the Full Article On Michael A. Gayed's Blog on Seeking Alpha
Author Bio:
This article was written by Michael A. Gayed. An author on Seeking Alpha and founder of the Lead Lag Report.
Steem Account: @leadlagreport Twitter Account: leadlagreport
Learn more about Michael A. Gayed on Seeking Alpha
Steem Account Status: Unclaimed***
Are you Michael A. Gayed (a.k.a. leadlagreport)? If so, you have a Steem account that is unclaimed with pending cryptocurrency rewards sitting in it from your content. Your account was reserved by the Steemleo team and is receiving the rewards of all posts syndicated from your content on other sites.
If you want to claim this account and the rewards that it has been collecting, please contact the Steemleo team via twitter or discord to claim the account. You can also view the rewards currently sitting in the account by visiting the wallet page for this account.
What is Steemleo Content Syndication?
The Steemleo community is syndicating high-quality financial content from across the internet. We're also creating free Steem accounts for the authors of that content who have not yet discovered the Steem blockchain as a means to monetizing their content and we're listing those accounts as the 100% beneficiaries to all the rewards. If you want to learn more about Steemleo's content syndication strategy, click here.
