Daily Gains Letter

Grow Your Portfolio with Consistent Dividends

By for Daily Gains Letter | Feb 28, 2013

280213_DL_zulfiqarThe global economy seems to be in trouble—an economic
slowdown is spreading and some are calling for a global recession.
The demand in the overall global economy is decreasing, and exports
are being hurt. The countries which were the manufacturing hubs are
producing less, and the consuming countries are watching their pockets.

Before I go into any further detail, take look at the chart for the Baltic
Dry Index (BDI) below. If the index goes downward on the chart, it means the global demand for exports is decreasing. In contrast, if it goes up, it suggests improving demand for goods in the global economy.

dl_02282013_image002Chart courtesy of www.StockCharts.com

Unfortunately, since the beginning of 2012, the index has plummeted, and it has stayed in stress ever since—suggesting global exports are in poor condition.

In times when exports become bleak, companies involved in transporting goods internationally usually become the victims and suffer. Not all companies can bear the storm—a decline in exports causes the volume shipped by these companies to decline, hurting their profits.

With that said, in any industry, there are always stars that have the ability to weather the turbulence and stay the course.

Nordic American Tankers Limited (NYSE/NAT) is a tanker company that owns and operates Suezmax crude oil tankers. The company is based in Hamilton, Bermuda. In the beginning of 2004, the company operated with only three vessels; by the fourth quarter of 2012, the company had a fleet of 20 vessels. (Source: “Nordic American Tankers Limited (NYSE:NAT)—NAT is well positioned to benefit as market fundamentals improve,” Nordic American Tankers Limited web site, February 11, 2013.)

The stock trades just above $9.00 with a three-month average volume of 657,190 shares per day. The company has 54.8 million outstanding shares and a float of 51.7 million shares. The book value of the company stands at $15.30. Nordic American Tankers (NAT) has total liabilities of $250 million and holds more than $56.0 million in cash. (Source: Yahoo! Finance, last accessed February 26, 2013.)

In its fourth quarter 2012, NAT reported a continued loss. The company saw its net income decline by $32.5 million. (Note that NAT had an impairment charge in the fourth quarter, which caused earnings to decline from $0.39 per share to $0.61 per share.) In the fourth quarter of 2011, the company had earnings per share of $0.37, compared to earnings per share of $0.44 in the third quarter of 2012.

Even when the company is experiencing losses, NAT has provided investors with a dividend for 62 consecutive quarters. Since the fall of 1997 the company has provided shareholders with dividends for the total amount of $44.10 per share. In the fourth quarter, the company announced a $0.16 dividend per share.


dl_02282013_image003Chart courtesy of www.StockCharts.com

Since the beginning of the year, NAT has been trading fairly sideways—no major swings to the upside or the downside. But, what’s interesting to note is that the stop prices have been finding support at the stock’s 50-day moving average (MA), suggesting a support formation at the current price level.

NAT has been hurt due to a slowdown in global exports, but it’s not the only stock in the industry to suffer.

For those looking to save and invest, companies like NAT can prove to be a bright spot in an anemic industry. This company provides investors with a consistent dividend, and it has a great track record with the potential to grow.

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