Big Dividend Cut Coming Within 2 Weeks For Nordic American Tankers

Last week, Nordic American Tankers (NYSE: NAT) issued a press release reaffirming the company's high priority for dividends. The full text reads (emphasis mine):

"Nordic American Tankers Limited ((NYSE: NAT)) - Dividend distribution for 2Q 2017. Dividend is a high priority for NAT.
Hamilton, Bermuda, July 7, 2017
The dividend for 2Q 2017 will be announced at the end of July; reflecting the distribution for the 80th consecutive quarter since the autumn of 1997. As reported in our message to the market of May 29, rates in 2Q 2017 were lower than in 1Q 2017, but well above our cash breakeven. In 1Q 2017, dividend was $0.20 per NAT share.
Typically, the NAT dividend will vary with the level of the tanker market. We send this message to reflect the strong NAT priority on dividend.
We are pleased with the position of NAT - financially, commercially and strategically."
I believe that this message is a warning for investors that a dividend cut for Q2 is impending. The text specifically highlights that Q2 2017 Suezmax spot rates were lower in Q1 2017 and that the level of dividend is variable with the level of the tanker market (rates).
NAT has many retail investors who like the company for the long track record of big dividends, which resulted in a very high premium valuation over peers. The Q1 2017 dividend was $0.20 per share, which translates into a current dividend yield of about 13%. The long track record of high dividends and... Read more

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