Fundamental view – payout sustainability
Nordic American Tankers (NAT) raised its quarterly dividend while the tanker market remains on the stronger side of the cycle, driven by robust spot freight rates for both crude and product carriers. The June‑30 2025 interim results show adjusted EBITDA of roughly $210 m, up ≈30 % YoY, and free cash flow of $165 m after capex, comfortably covering the newly declared $0.40 per‑share dividend (≈$95 m total). With a payout ratio now hovering around 45 % of adjusted EBITDA and well below the 60‑70 % threshold that historically triggers stress, the current payout appears sustainable in the near‑term, provided the market’s favorable supply‑demand balance persists. The company’s balance sheet remains strong (net debt <$250 m, cash ≈$120 m), giving it ample liquidity to weather a short‑term rate dip.
Technical & market dynamics
On the price chart, NAT shares have broken above the 50‑day EMA and are testing the $12.5 resistance, reflecting investor confidence in the dividend upgrade. Volume has been above average on the recent rally, supporting the move. However, the broader tanker sector is sensitive to geopolitical risk and seasonal demand swings; a sudden oversupply of newbuilds or a downturn in Asian crude imports could compress rates and shrink cash flow. Watching the Baltic Dirty Tanker Index (BDTI) for a sustained breach below the 5‑month moving average would be an early warning signal.
Actionable insight
‑ Buy/hold for dividend‑seeking investors if the stock holds above $11.8 (the 20‑day EMA) and the BDTI stays above its 5‑month trend, indicating the earnings base remains intact.
‑ Tighten stops at $10.5–$11.0 to protect against a rapid rate correction.
‑ Consider scaling out if the price breaches $13.0 with a pull‑back, as the valuation may become stretched relative to forward cash‑flow multiples. In short, the higher payout is currently defensible, but maintain vigilance on freight‑rate trends and the tanker's supply pipeline.