If you ever buy slabs of fresh salmon at, say, your local Costco, you’re probably buying farm-raised fish from Marine Harvest. That salmon sashimi at your local sushi restaurant? It may be from Marine Harvest, too. The Norway-based company is wringing cash from its catches, with a trailing 12-month dividend yield of 8.7%.

Farm-raised fish is a booming business, and, as the largest fish-farming business in the world, Marine Harvest is riding the wave. Almost half the seafood eaten worldwide today is farm-raised, as opposed to caught in the wild, and the percentage of farm-raised seafood is expected to hit 62% in the next 15 years, according to the World Bank.

Salmon is behind only tuna as the most-consumed fish, and one in five Atlantic salmon eaten worldwide comes from Marine Harvest. The company has fish farms in Norway, Canada, Chile, Scotland, Ireland and the Faroe Islands (halfway between Norway and Iceland).

Rising Tide

Without irony, the company talks about expanding upstream and downstream. But before we examine its future prospects, let’s look at the dividend.

We’ve put Marine Harvest in our Aggressive Portfolio because its dividend is irregular, though its formula for paying dividends has encouraged us enough to add it to our list. Its dividend policy is that as long as its debt is less than half of its equity, it will pay at least 75% of free cash flow, after certain expenses, as dividends. So, in 2010, it paid three dividends amounting to 94 cents; in 2011, it paid one dividend of $1.45; in 2012, shareholders did without; and last year, it paid three dividends totaling 37 cents.

This year, though, the company has paid two dividends so far of $1.03 per share. Although it didn’t make a profit in its second quarter, it posted record sales and cash flow, and it is paying a 17-cent dividend later this month.

A note about the dividend: Norway withholds a 15% tax on dividends for nonresident investors. If you hold the stock in a tax-deferred account, such as an IRA, you can’t get that money back. However, you can get up to $300 back ($600 for joint returns) directly on your Form 1040. To get back more, you’ll have to file Form 1116, the IRS foreign tax credit form.

The stock price has risen on a fairly steady track the last three years, from about $5.30 a share to $13.65 a share.

Diving In

The business has some unique variables, but it’s also well diversified internationally. To appreciate these variables, you have to know a little about the salmon business. The demand for salmon is global, so salmon prices rise and fall globally. To hedge price swings, salmon futures are traded on the Fish Pool exchange in (where else?) Norway.

And salmon prices can swing wildly. For example, the price of farm-raised salmon peaked at more than $17 a pound in April 2011, then crashed to $9 a pound in October of that year due to the Great Chile Salmon Selloff. After disease decimated salmon stocks from 2008 to 2010 in Chile, a bumper crop in 2011 led Chilean salmon farmers to flood the market, crashing prices.

Since then, the price of farm-raised salmon has gradually risen again, to more than $17 in January of this year. But an infestation of so-called sea lice caused many farmers to harvest more salmon than they had planned to, again flooding the market. That pushed salmon prices down and caused Marine Harvest to write down the value of its stocks and take a loss in the second quarter. However, it had record quarterly earnings before interest and taxes of $212 million, versus $156 million for the same quarter last year.

Feeding Expansion

Prospects look better for the end of this year and into 2015. And Marine Harvest is no longer a one-trick fish. In addition to selling salmon, it is now making its own fish food (much like the pellets you put in your aquarium), so controlling the biggest cost of the three-year, small-fry-to-fully-grown-fish cycle. That’s the upstream expansion.

Marine Harvest is also adding fish-processing operations around the world to cut the salmon into various steaks and fillets, and to prepare smoked salmon and heat-and-serve entrées. This downstream expansion spawns profits that it had conceded to other firms.

With its fat, if irregular, dividends and dominance in a rapidly growing industry, Marine Harvest is a buy up to $16 a share.