Dividends4Life: High Yield Stocks for Dividend Investing: Nordic American Tankers Ltd

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. 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.

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.

Source: Motley Fool

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