With a 5.9% yield Nordic American Tankers Ltd (NYSE:NAT) is a certainly a high yield stock. The only problem is that its dividend payout has fluctuated wildly over the past few years. Just take a look at the following chart.

NAT data by YCharts

At its peak in the first quarter of 2006, Nordic American Tanker issued a $1.88 dividend that quarter. Today, its quarterly payout is just $0.12 after being $0.23 just last quarter. Not only is that a huge difference, but this fluctuating dividend makes it really hard for income investors to balance dividend cash flows with personal expenditures. That's why it might not be the best high yield stock for dividend investing.

Why the payout is choppy

Most dividend paying stocks pay a fixed-rate dividend each quarter, and the best dividend payers will increase that fixed rate at least annually. Nordic American Tankers, on the other hand, pays a variable divided based on its income. Its stated dividend policy is to pay a quarterly dividend that's approximately equal to its net operating cash flow the previous quarter after any reserves are determined by the Board of Directors. So as its operating cash flow rises and falls with its business, so does its dividend.

That operating cash flow can be very, very volatile as the company's business model has it operating strictly on the spot market for shipping oil around the world rather than entering into long-term contracts. While this allows the company to take advantage of strong pricing when spot market pricing surges, it doesn't protect the company's cash flow when spot market prices are weak.

Source: Flickr user rablem22.

Why some investors aren't afraid of that volatility

Since 1997, Nordic American Tankers has paid a dividend 68 times, doling out a total of $45.02 per share to investors. The reason the company has paid out so much money in dividends is because it is focused on keeping its debt levels low while only owning one type of vessel.

By keeping its debt levels low the company can limit its financial risk so that it can withstand the volatility of the spot market. This has allowed the company to steadily grow its Suezmax fleet as it can take advantage of market weaknesses to add to its fleet. The company recently did just that as it added two more vessels bringing its total fleet up to 22 vessels.

Further, focusing only on owning Suezmax vessels enables the company to keep its operating costs low. That allows it to earn higher returns when spot prices are high while also keeping its head above water when spot prices are low. Further, with ultra-low operating costs Nordic American Tankers can still generate operating cash flow each quarter so that it is able to at least pay something to shareholders no matter what's happening with spot market prices.

That being said, the Nordic America Tankers' dividend is just too volatile for investors that are seeking regular income. There are simply better stocks to own as part of a dividend investing strategy.