Are the salad days of higher and higher tanker rates, and ever-higher dividends, coming to an end -- at least for this economic cycle?
Nordic American Tanker Shipping
Oil tanker stocks had been riding high. Booming economic demand, especially in India and China, sent leasing rates skyward. Those rates in turn increased order rates for new ships at already capacity-constrained ship yards, which were previously expecting to scrap a significant percentage of the industry's fleet due to double-hull regulations taking full effect in 2010.
Nordic earned $0.57 a share in the second quarter, when the IMAREX Suezmax spot rate was $32,654 a day. The third-quarter average rate is $23,246 a day -- a significant drop that accounts for the company's current earnings shortfall.
Investors would be wise, however, to look at current and future Suezmax rates. On Sept. 22, the Suezmax spot rate was $29,216 a day -- a solid strengthening. Fourth-quarter rates are currently at $44,816 a day, so the future is not as gloomy as the stock's fall from $56.68 in February to $37.69 today might suggest.
Nordic and peers Frontline
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