We report on the synthesis of water dispersible salicylic acid –Fe₃O₄ nanocomposites via a co-precipitation route by using Fe(III) and Fe(II) chloride salts, and salicylic acid. Crystalline phase was identified as Fe₃O₄ and the crystallite size was obtained as 13±6nm from X-ray line profile fitting. As compared to the particle size of 20nm obtained from TEM analysis these particles show polycrystalline nature. The capping of salicylic acid around Fe₃O₄ nanoparticles was confirmed by FTIR spectroscopy, the interaction being via bridging oxygens of the carboxylate and the nanoparticle surface. ac and dc conductivity measurements performed on the nanocomposite revealed semiconductor characteristics and varying trends with temperature due to reorganization of the nanocomposite. Permittivity measurements showed increasing dielectric constant with increasing temperature as expected from semiconductors. Analysis of electrical modulus and dielectric permittivity functions suggest that ionic and polymer segmental motions are strongly coupled in the nanocomposite.