Flex LNG's 12% Dividend Yield: A Fortified Payout Backed by Strategic Refinancing and LNG Growth

Flex LNG (FLNG) has emerged as a compelling income play in the energy sector, delivering a trailing twelve-month dividend yield of 12% while strengthening its financial fortress through strategic refinancing. With a fifteenth consecutive $0.75-per-share quarterly dividend, the company has demonstrated unwavering commitment to shareholder returns. But what truly sets Flex LNG apart is its ability to sustain this payout amid fluctuating LNG markets—and its bold moves to lock in long-term liquidity. Here's why investors should take note now.

Dividend Sustainability: A Strong Foundation of Cash and Contracts

Flex LNG's dividend has been a consistent bright spot, with $650 million paid out since late 2021. While Q1 2025 earnings dipped slightly due to lower spot-market exposure and vessel redeliveries, the company reaffirmed its full-year guidance, signaling confidence in its 59-year minimum charter backlog (extensible to . This robust backlog provides a $340–$360 million revenue floor for 2025, directly supporting dividend sustainability.

Key to the dividend's safety is Flex LNG's $410 million cash balance and zero debt maturities until 2028. Management has intentionally prioritized liquidity over short-term gains, a strategy that shields the dividend from near-term market volatility. Even after paying out $41 million in Q1 dividends, the company retains ample funds to navigate drydock costs and opportunistic refinancing.

Strategic Refinancing: Lower Costs, Extended Maturities, and $120M in Liquidity

Flex LNG's Balance Sheet Optimization Program 3.0 is a masterclass in capital management. The recent $175 million sale-leaseback deal for the Flex Courageous—finalized in May 2025—delivered $42 million in net proceeds, reduced annual debt costs by 1.5%, and pushed maturities to 2035. This transaction is just the first of three planned for 2025:

• Flex Resolute and Flex Constellation refinancings are expected to add $120 million in total proceeds by year-end, further extending debt maturities and lowering interest expenses.
• Combined with its $414 million revolving credit facility, Flex LNG's liquidity position is unassailable, even as it prepares for drydock spending on four vessels this year.

The program's focus on cost reduction and maturity extension ensures dividends remain insulated from rising interest rates. By mid-2025, Flex LNG had already increased its interest rate swaps to $850 million notional, covering 70% of debt over the next two years at an average fixed rate of 3.5%—a proactive hedge against volatility.

LNG Market Tailwinds: U.S. Growth and Long-Term Demand

While Q1 spot rates dipped into single digits—a temporary drag—the LNG sector's long-term outlook is bullish. Key catalysts include:
1. U.S. LNG Projects: The Louisiana LNG Final Investment Decision (FID) and other U.S. projects will ramp up exports post-2028, driving higher charter rates.
2. Contract Renewals: Vessels like Flex Artemis (due for re-chartering in Q3 2025) and Flex Constellation (spot-market until 2026) will benefit from this rising demand.

Flex LNG's zero Lost-Time Injury Frequency (LTIF) and ESG commitments—highlighted in its 2024 sustainability report—also align with investor preferences for responsible operators in high-regulation industries.

The Investment Case: 12% Yield with a Safety Net

Flex LNG's 12% dividend yield is not a flash in the pan. It is underpinned by:
- A $410 million cash war chest and no debt until 2028.
- A 59-year charter backlog that provides decades of steady revenue.
- $120 million in refinancing proceeds this year, further bolstering liquidity.

For income investors, the stock offers a rare combination: high yield, dividend safety, and exposure to a $300+ billion LNG market poised for growth. With shares trading at a discount to peers and a balance sheet optimized for the next decade, Flex LNG is a buy now for those seeking income and resilience.

Backtest the performance of Flex LNG (FLNG) when 'buy condition' is triggered on quarterly earnings announcement dates and 'hold for 90 days', from 2020 to 2025.

Action to Take: Flex LNG's dividend is a rock in a stormy market. With strategic refinancing and a backlog that rivals few, investors can secure a 12% yield while positioning for LNG's next wave. Act now—before the market catches on.

Disclosure: This analysis is for informational purposes only and not a recommendation to buy or sell securities. Always conduct your own research or consult a financial advisor.