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Nordic American Tanker Shipping Limited (NYSE: NAT) shares surged higher after CNBC's Jim Cramer recommended the stock on his award-winning Mad Money show. The television anchor hailed the shipping company as "the next Frontline Ltd (NYSE: FRO)" - a previous recommendation that is up 17% since it was first mentioned. Investors piled into the stock today and sent shares nearly 7% higher on much higher-than-normal volume.

Nordic American Tanker Shipping has benefited handsomely from rising spot prices in the shipping business. These prices have risen due to higher oil prices and a reduction in the number of Very Large Crude Carriers (VLCCs). In fact, Cramer pointed out that the number of carriers has available has been cut in half over the last month from 56 to just 28. An increasing number of tankers are being converted for dry bulk shipping or offshore vessels.

Nordic American Tanker Shipping owns 12 Suez Max double-hulled tankers and has two more under construction. Currently, 11 o these tankers are contracted at spot prices. Problems surfaced when the company reported average daily rates of just $46,000 per day in its latest quarter when the market averaged $60,000 per day. Investors didn't like that number and shares sold off to their levels seen yesterday.

Jim Cramer insisted that it was the dividend that investors should be watching. The ex-hedge fund manager insists that if spot rates climb to $60,000 per day, then Nordic American Tanker Shipping could boost its dividend to as much as $1.56 per share. This means that the implied yield on the dividend would be around 17%. The situation that Cramer describes is a dividend hike, which sends the stock up, which sends the yield down.

Shares of Nordic American Tanker Shipping Limited rose $2.46, or 6.71%, to $39.10 on the day.

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