Nordic American Announces 110th Consecutive Dividend
An income pick that I think deserves the spotlight today is Nordic American Tankers Ltd (NYSE:NAT).
While oil prices continue to take a hit on concerns about global economic growth, demand for oil and gas midstream companies, especially those that transport crude oil, remains robust.
This is because the new Trump administration is increasing pressure on sanctioned oil trades and sanctioned vessels. That includes sanctions targeting Russia’s oil and gas industry and Iran-backed Houthis.
In late April, for example, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) said it was targeting vessels and their owners for providing support to Houthis; an Iran-backed terrorist group that has targeted shipping lanes in the Red Sea since late 2023. (Source: “Treasury Targets Vessels Delivering Oil Derivatives to the Houthis,” U.S. Department of the Treasury, April 28, 2025.)
Over that time, the Houthis have deployed missiles, unmanned aerial vehicles, and naval mines. They also profit from the shipment of goods through ports they control, especially when it comes to refined petroleum products.
Increased pressure is obviously not great for those vessels supporting sanctioned oil trades. On the other hand, it’s positive for a company like Nordic American Tankers. The Bermuda-based company is optimistic about its prospects for 2025, as these sanctions should result in additional demand. A fully compliant company in all aspects, it has not transported Russian oil for the last 3.5 years.
About Nordic American Tankers Ltd
Nordic American acquires and charters double-hull tankers in Bermuda and internationally. It currently operates a fleet of 20 Suezmax crude oil tankers, with a cargo lifting capacity of one million barrels of oil each. (Source: “Overview,” Nordic American Tankers Ltd, last accessed April 29, 2025.)
It’s getting bigger, too. Nordic American has recently acquired a Suezmax tanker and also agreed to acquire a sister vessel from the same owners. Both vessels are fully financed and will provide additional earnings and dividend capacity. Following these transactions , the company’s fleet will consist of 21 Suezmax tankers. (Source: “Nordic American Tankers Ltd (NYSE: NAT) – The NAT fleet is expanding, providing room for continued dividend payments,” Nordic American Tankers Ltd, March 14, 2025.)
A Suezmax is a medium-sized oil tanker, larger than Aframax but smaller than a Very Large Crude Carrier (VLCC). It is the largest ship that can transit the Suez Canal, the artificial waterway that connects the Mediterranean Sea with the Red Sea.
Suezmax tankers are around 900 feet long and have a capacity of 120,000 to 200,000 deadweight tonnage (dwt). As an oil tanker, this means they can carry 800,000 to more than one million barrels of oil. They are also primarily used on long-haul routes, like a trip from Saudi Arabia to the U.S.
2024 Profitability of $46.6 Million
For the year ended December 31, 2024, Nordic American reported total net voyage revenue of $225.0 million. This is down from $262.2 million in 2024 but also up significantly from the $168.8 million in 2023. (Source: “Nordic American Tankers Ltd (NYSE: NAT) – Report as per December 31, 2024 – The direction is upwards. Dividend payments continue and are 6 cents this quarter,” Nordic American Tankers Ltd, February 28, 2025.)
This resulted in full-year net income of $46.6 million, or $0.22 per share. The average time charter equivalent (TCE) for the fleet during the fourth quarter came in at $26,416 per day per ship, leaving Nordic American with a solid operating margin, as running costs per vessel are about $9,000 per day.
The Company’s “Primary Objective”
Dividends are important for Nordic American Tankers because it goes out on a limb and calls itself a “Dividend Company.” In its full-year results, management stated, “whatever we do, dividends remain our primary objective.”
Since its inception in 1995, Nordic American Tankers has been exactly that, a company with a reliable dividend. Of course, that’s music to the ears of income investors. (Source: “Dividends,” Nordic American Tankers Ltd, last accessed April 29, 2025.)
The company’s policy is to declare quarterly dividends to shareholders based on its net operating cash flow during the previous quarter. This results in a variable quarterly dividend.
For the first quarter of 2025, Nordic American declared a dividend of $0.06 per share, or $0.34 per share on an annual basis, for a forward dividend yield of 13.4%. This payout represents a 50% increase over the $0.04 paid out in the fourth quarter of 2024. It’s also the company’s 110th consecutive quarterly dividend.
Could NAT Stock Have 55% Upside?
NAT stock hasn’t exactly been lighting up Wall Street over the last year, being down 28% over the last 12 months. But it’s actually been doing better than the S&P 500 in 2025, rising 5.5%, the opposite of the index’s loss of 5.5%.
The outlook looks more promising, though. After Nordic American reported 2024 earnings of $0.22 per share, analysts expect its earnings to slip to $0.19 per share in 2025 before jumping to $0.30 per share in 2026. However, there are high earnings estimates of $0.27 per share for 2025 and $0.32 per share for 2026.
This has resulted in Wall Street analysts providing a 12-month share price target range of $3.00 to $4.00 per share. This points to potential upside of approximately 16% to 55%.
Chart courtesy of StockCharts.com
The Lowdown on Nordic American Tankers Ltd
In summation, Nordic American Tankers Ltd is an oil and gas midstream company that owns one of the largest fleets of Suezmax tankers in the world, with long-term contracts with major oil companies.
In addition to a growing fleet, it recently announced a new and improved $150.0-million financing agreement. On top of that, seven of its vessels are not encumbered and are debt-free, providing the company with greater financial flexibility.
Taken together, 2025 is expected to be an active year for Nordic American Tankers, which already puts the company in a strong position. This should result in Nordic American continuing to offer income investors one of the best dividend policies in the midstream sector.
This helps explain why 257 institutions hold a 41.3% stake in Nordic American Tankers. Some of the biggest holders include BlackRock, Morgan Stanley, and Goldman Sachs Group.