Good Dividend News

With the market as ugly as it has been over the last week, it is nice to get some good dividend news on a couple of the stocks I follow. Markets like these tend to drive down the good along with the troubled and many good companies become great values. The problem is that a fear driven market can continue to fall with no regard to strong fundamentals. When strong dividend paying stocks make a positive announcement, it can help prop up the stock price.

Nordic American Tanker (NAT): CEO Herbjørn Hansson has issued a letter to shareholders indicating the 3rd quarter dividend will be in the $1.50 range. This is close to the $1.60 paid for the very profitable second quarter. The letter reported strong daily charter rates for the quarter and at this point most of the earnings are in the bank for the 3rd quarter. NAT leases all but one of their Suezmax tankers on the spot market and have very low daily expenses for their vessels. Dividends fluctuate significantly with the spot market rates but the stock has historically paid at least a 10% annual dividend. With the share price in the low $30’s the stock should reward shareholders handsomely in the coming quarters.

Aircastle Limited (AYR) has announced a 25¢ dividend for the shareholders of record on September 30. AYR reduced the dividend by over half in the first quarter of this year and this is the 3rd quarter in a row at the 25¢ rate. The company has free cash flow in the $1.00 range so the 7.8% yield is well covered. I believe the company will start increasing the dividend again when the current financial turmoil settles and in the meantime shareholders are being paid well to hold the stock.

NAT and AYR are components of this site’s Income Portfolio. I use this model to track a select portfolio of income stocks.

Note: I currently have a long position in NAT.

Posted in Categories: Contributor, External Research, Stocks.

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