The energy sector doesn’t have much to offer investors these days. In fact, just yesterday I went in-depth with you here about precisely how vulnerable energy investors are right now to dangerous price fluctuations and sudden dividend cuts.
But if you’re still hopeful that there must be a good bet on energy out there somewhere, then I’m here to tell you there is. However, this one investment might be the only way you’ll make any direct money in today’s energy markets.
With all the woes plaguing energy producers these days, we need to stop looking at energy extraction as our golden goose, and we need to take a harder look at some of the more fiscally stable necessities of the refinement process. The reality is, even if crude prices continue falling, our need for oil isn’t disappearing anytime soon.
So what we need to find today is an investment that isn’t exposed to the drama unfolding in the global oil markets. We need something that’s required in the supply chain regardless of existing surpluses. What we should be looking at, then, is the transportation of raw materials from one location to another.
You see, in order to get their raw crude across the ocean for processing and consumption, struggling energy producers like Exxon (XOM) and Chevron (CVS) rent massive tankers from independent companies like the one I want to tell you about today.
This little piece of the energy supply chain is so amazingly lucrative that since it opened operations in 1997, my favorite tanker company has paid a dividend to shareholders an absolutely extraordinary 74 times. That’s 74 quarterly dividend payouts in only 19 years. And right now, this company is offering investors like you and me a generous 12% yield to boot.
But that’s not all. Sometimes, a decent-sized dividend reveals other fundamental weaknesses. That’s not the case here, though. This company’s operating cash flow also rose an impressive 16% in Q4 2015. And analysts are placing estimated earnings growth for this quarter at 11%. Plus, if I haven’t whetted your appetite enough yet, analysts are forecasting 17% sales growth for the current quarter as well.
Add it all up, and Nordic American Tankers (NAT) is an impressive investment regardless of what the overall energy patch may be producing for other investors right now. That’s why it’s a double-winner garnering A-ratings in both my Portfolio Grader and Dividend Grader tools.
I certainly hope that if you’re truly interested in investing in the energy markets, you’ll take a closer look at Nordic American Tankers. And I urge you to tune back in here tomorrow for the third and final installment of my series on successfully navigating today’s tricky energy sector.