A couple of comments on the above linked tanker market summary. Nice to see VLCC rates back above $85k. They averaged $25k for all of 2009.

There are only 50 VLCC tankers available in the Arabian Gulf for the next month. Typically, 90 of the big tankers are needed each month so spot rates could move significantly higher.

What caught my eye is the quoted average tanker rates for the 2nd and 3rd quarters of 2009. The 2nd quarter had an average rate of $20,569 for Suezmax tankers. The 3rd quarter has been even worse with a daily average of just $12,932. This is still above breakeven for Nordic American, but has to be murder on Frontline.

I expect NAT to pay a quarter of less for the 3rd quarter dividend. With the way the rates have trended throughout the year I am pleasantly surprised the stock price is holding near $30. It appears that the market believes tanker rates will recover in the near future as economic recovery starts to pump up energy demand. The price of oil over the last several months seems to indicate a near term recovery in energy usage.

NAT Letter to Shareholders

Navios Maritime Holdings NM pays what in this sector would be considered a nominal dividend of 6¢ per share. From 2006 until the 2nd quarter of 2008 it was 7¢, then jumped to 9¢ for two quarters before being reduced to the current payout for the last two periods. The dividend appears to be somewhere around half of the net income. Cash flow when you figure in depreciation should be more than sufficient to cover the payout.

Navios Maritime Partners LP NMM is an MLP style spinoff from Navios Maritime. It appears that NMM was able to skim the cream off the dry bulk contracts from NM and pays a hefty dividend. The ships are on long term insured contracts. The current distribution of 40¢ per share puts the yield at 17%. NMM will be adding to the fleet and the payout should grow over time. I personally own shares of NMM and plan to buy more.

Nordic American Tanker NAT is a Suezmax only tanker company that has all of their vessels except one chartered in the spot market. The dividend will fluctuate each quarter based on the tanker spot rates and Nordic’s cash flow. In this century the quarterly distribution has varied between 32¢ and $1.88 per share. Over the last 20 quarters (5 years) NAT has paid out a total of $23.36 in dividends. The company has no debt and will pay a distribution in almost any foreseeable market condition. Tanker rates have been very low since early 2009 so the payouts for the next few quarters could be pretty slim. I own shares in NAT also.

Again, these three stocks show the different styles of earning revenues and paying them out to shareholders. More info on dividend paying shipping stocks will be up soon.

Here are the payors 11 through 15 on my list. The stocks are listed in this order: Company and stock symbol, dividend earned on $1000 invested on 1/1/2009 (divide by 5 to get an annualized percentage) and the share price change since the beginning of the year.

• Nordic American Tanker NAT, $52.50, -1.7%
• Ship Finance Ltd.SFL, $54.00, +10.8%
• Horizon Lines, Inc. $62.92, +44.7%
• Seaspan Corp., $64.40, -20.7%
• TORM AS TRMD, $66.68, +4.0%

This group is almost all tankers and containers. Horizon and Seaspan are in the container business. Nordic American and TORM are primarily tanker companies and Ship Finance is tankers, containers and offshore.

TORM has a policy of a single annual dividend though they have paid out mid-year distributions on occasion.

The divergence of the Y-T-D returns for the two container companies is interesting. Horizon primarily a domestic flagged company and is dependent on the health of the U.S. economy. A leading indicator? Seaspan has a lot of ships on order, but seem to have contracts in place for them as they are delivered.

I own personal positions in NAT and SFL.