Oil and gas companies don't get to have all the fun when prices shoot up. Because oil and gas aren't worth too much unless they can be shipped from the wellhead to the customer, tanker companies have also seen boom times of late as demand has outstripped supply and pushed rates considerably higher.

Though not among the largest tanker operators, Greece-based Tsakos Energy Navigation (NYSE:TNP) is nevertheless a good pure play on oil shipping. As such, it was no great surprise to see the company post a very solid fourth quarter and full-year 2004.

Revenue in the December quarter climbed 49%, with charter rates for the company's vessels rising by more than 50%. While operating and overhead costs also climbed, the company more than doubled its net income for the quarter to almost $42 million.

Despite an aggressive construction plan under which five new vessels are to be added this year, the company posted free cash flow of roughly $61 million for 2004 as opposed to negative cash flow for 2003. Sharing some of that wealth, the company has hiked its dividend by 35%, and the stock now yields nearly 5%. Investors should note, though, that unlike most American companies, Tsakos pays its dividend on a semi-annual rather than quarterly basis.

Judging by the stock's low trailing price-to-earnings ratio (nearly 5) and lower forward estimates, it's clear that Wall Street believes that the oil shipping business has seen the peak of the cycle. To some extent, this is probably true. Shipping rates have already backed off of their late-2004 peaks because new tanker capacity is coming online.

The key to the equation, though, is global oil demand. Tanker rates have dropped in part because of slowing import growth into China and general economic malaise in markets like Japan and Germany. Should growth in any of these economies pick up, rates could quickly head up again because the current tanker demand-capacity balance is pretty delicate.

Given the strong moves already seen in the tanker space, Fools are probably better off looking elsewhere for ideas. While nobody can say for certain whether we have seen the peak in tanker shipping rates, the odds seem to be more in favor of yes than no, and owning a cyclical stock coming off of its peak can be painful.

Nevertheless, for those who just have to own a tanker stock, Tsakos does offer a good dividend, a young and improving fleet, and an operating philosophy that should leave them comparatively better off should rates drop further.

Fool contributor Stephen Simpson, a chartered financial analyst, has no ownership interest in any stocks mentioned.