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Home»Retirement»Flex LNG’s 13% Yield Could Be About to Sink
Retirement

Flex LNG’s 13% Yield Could Be About to Sink

February 27, 2025No Comments2 Mins Read
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Flex LNG’s 13% Yield Could Be About to Sink
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With its 13% yield, it’s no surprise that I’ve been receiving lots of requests to take a look at Flex LNG‘s (NYSE: FLNG) dividend safety.

Flex LNG is a Bermuda-based shipping company that owns 13 vessels that transport liquefied natural gas, or LNG. Eleven of those ships have long-term contracts.

Though the company’s free cash flow ticked higher in 2024, it has been trending lower, and next year’s figure is forecast to be the worst since the pandemic.

Chart: Flex LNG Is entering Rough Waters

Declining cash flow is worrisome, particularly for a company that pays a big dividend.

In 2024, Flex LNG paid out $162 million in dividends for an 88% payout ratio. That’s too high. It doesn’t give much room if free cash flow continues to decline.

Considering that free cash flow is projected to drop to $152 million in 2025, that means the company would not be able to afford its current dividend this year.

Making matters worse is the forecast that the company’s total dividend payout is expected to increase to $176 million for a payout ratio of 116%. In other words, for every $1 of free cash flow, Flex LNG would pay out $1.16. That is not sustainable.

Flex LNG eliminated its dividend in the early days of the pandemic. But since then, its dividend payment history has been consistent, with a few raises and several special dividends.

However, the current quarterly dividend of $0.75 is too high for the amount of cash flow the company generates. If cash flow continues to fall as projected, Flex LNG will have to cut the dividend or find the cash some other way, like taking on more debt.

See also  Survey: Market pros see 10-year Treasury yield under 4% a year from now

The dividend is not safe.

Dividend Safety Rating: F

Dividend Grade Guide

What stock’s dividend safety would you like me to analyze next? Send me your requests by clicking here.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name, and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds, or closed-end funds.



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