wearmanyhats

On Saturday I got an e-mail asking for some comments on a few stocks that are posting good dividends. The writer gave me a list of high yield stock to use as food for thought in my blog.  Immediately Nordic American Tanker (NAT) stood out, and I had to smile.  It was like running into an old friend.

I came across NAT years ago right before one of their lease agreements was set to expire with a major customers.  Investors bailed on the uncertainty, and the stock dropped down to under 15.  I was new to investing, new to my favorite technique of finding stocks, and bought it on a lark.  The stock zoomed to over 20 and I sold out.  If I had sat on it, I would have made good money over the years.

So why am I not recommending them today?  The P/E  of 26 has put me off.  The sector is slowly pulling back from a good recent run, and a patient investor can toss money in when the sector is out of favor.  If I’m wrong, then patiently waiting for a slight correction would be better.

But what about that 8% dividend?  That certainly looks tempting, but there are many other high dividend paying stocks out there such as BPT and FRO.  If you want to stay strictly in water transport, Eagle Bulk Shipping (EGLE) would pay a decent dividend and make more money moving upward. Their financials look solid and their growth as a stock has been respectable.  But like NAT, it’s going through its cyclical correction.  Patience may snag you nicer dividends in the near future.

NAT routinely offers good dividends, but those dividend returns get even bigger when the shipping transport sector corrects.  Let me add this, however.  If you are the kind of person that likes to buy a stock and not look at the returns on that stock for three or four years, then you would not be displeased in NAT.  But if you are like me, checking the thing a lot, you’ll shoot NAT and put it out of its misery long before it can make you the money you deserve.

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