Flex LNG's Resilient Dividend Strategy Amid LNG's Golden Age: Why Investors Should Take Note Now

In an era where dividend sustainability is under scrutiny across energy sectors, Flex LNG stands out. With its fifteenth consecutive $0.75-per-share quarterly dividend, a trailing 12-month yield of ~12%, and a fortress balance sheet, the company is positioning itself as a premier income play. Let’s dissect how Flex LNG is leveraging its financial strength, contractual depth, and strategic refinancing to navigate market headwinds while capitalizing on LNG’s structural boom.

The Dividend Machine: Backed by Cash and Contracts

Flex LNG’s dividend history is a testament to its financial discipline. Since Q4 2021, the company has distributed over $650 million in ordinary and special dividends, including the current $0.75 quarterly payout. This is no small feat: the dividend is fully supported by a $410 million cash balance and a minimum 59-year firm contract backlog, which could stretch to 88 years if all extension options are exercised. These contracts—locked in at stable rates—form the bedrock of dividend predictability.

The company’s debt maturity profile further insulates its payout. With no borrowings due before 2028, Flex LNG enjoys unmatched liquidity flexibility. This is critical as it executes refinancing deals to reduce interest costs and extend maturities, such as the recent $175 million, 10-year sale-and-leaseback for the Flex Courageous. Such moves free up capital while aligning debt timelines with vessel charters.

TCE Rate Dip: A Temporary Cloud Over a Sunny Horizon

The slight dip in Q1’s average TCE rate to $73,891/day from $75,319 in Q4 2024 warrants scrutiny but not alarm. The decline stemmed from two factors:
1. Flex Artemis operating on a variable-rate contract, which underperformed in spot markets.
2. Flex Constellation temporarily returning to the spot market before transitioning to a 15-year fixed charter in H1 2026.

These were strategic moves to maximize vessel utilization while preparing for long-term contracts. By mid-2026, Flex Constellation’s fixed-rate charter will stabilize TCE, and the fleet’s average charter duration will rise further. Meanwhile, the Flex Endeavour’s 500-day extension to Q1 2032 underscores the company’s ability to secure favorable terms in a tightening LNG market.

LNG Demand: Fueling Flex LNG’s Future

The LNG sector is at an inflection point. New liquefaction projects, such as Woodside’s Louisiana LNG (expected online by 2027), will amplify global demand. Flex LNG’s fleet—equipped with modern MEGI and X-DF propulsion systems—is primed to serve this growth. With 37 years added to the backlog in late 2024 and vessels like Flex Resolute and Flex Constellation entering multiyear charters, the company is securing revenue visibility through the next decade.

ESG: More Than a Buzzword

Flex LNG’s 2024 ESG report highlights a zero Lost Time Injury Frequency (LTIF) rate and a focus on emissions reduction. Its fleet’s fuel efficiency and adherence to environmental standards align with investor and regulatory priorities. This commitment to safety and sustainability reduces operational risks and strengthens client trust in a sector increasingly scrutinized for its carbon footprint.

Risks? Consider the Counterpoints

Critics may flag market volatility or geopolitical disruptions. However, Flex LNG’s diversified portfolio—spanning 15 vessels with geographically spread contracts—and its lack of near-term debt maturities mitigate these risks. The company’s proactive refinancing and liquidity buffer ensure it can weather short-term turbulence while capitalizing on long-term trends.

The Investment Case: Yield Meets Growth

At a 12% dividend yield, Flex LNG offers income seekers a rare blend of stability and upside. The stock’s valuation remains undemanding relative to peers, given its fortress balance sheet and contracted backlog. Meanwhile, the Louisiana LNG project and similar ventures signal a multiyear tailwind for LNG carriers. For income investors, this is a chance to lock in high yields while riding the wave of global energy transition.

Final Takeaway: Act Now, or Risk Missing Out

Flex LNG is not just surviving—it’s thriving. With dividend sustainability baked into its DNA, a liquidity cushion that rivals few in the sector, and a fleet primed for LNG’s next chapter, this is a stock to own for the long haul. The question isn’t whether to invest, but whether to act before the market catches up to its value.

For investors seeking both income and growth in energy infrastructure, Flex LNG is a name to watch—and buy—now.