Golar LNG's Strategic Dividend Amid Record EBITDA Backlog and FLNG Growth Catalysts

Golar LNG (NASDAQ: GLNG) has long been a standout in the energy sector, balancing aggressive growth in floating liquefied natural gas (FLNG) infrastructure with a disciplined approach to shareholder returns. The company's recent $0.25 per share dividend declaration for Q2 2025, coupled with a robust EBITDA backlog and a pipeline of high-margin FLNG projects, underscores its strategic positioning to deliver both near-term stability and long-term value. For investors, the question is whether this balance of risk and reward justifies a closer look at GLNG's capital structure and growth trajectory.

A Dividend Policy Anchored in EBITDA Strength

Golar LNG's dividend of $0.25 per share for Q2 2025 is not an anomaly—it's part of a consistent pattern of quarterly payouts since 2023. This stability is underpinned by the company's adjusted EBITDA performance, which hit $41 million in Q2 2025 and has historically averaged $70 million in prior quarters. With Total Golar Cash reserves at $678 million as of Q1 2025, the firm has the liquidity to sustain its dividend while funding capital-intensive FLNG projects.

The payout ratio, though elevated at ~73% in 2024, has improved from a negative 224% in 2023, reflecting stronger earnings. This trend suggests Golar is moving toward a more sustainable dividend coverage ratio, supported by its $3 billion Adjusted EBITDA backlog from secured FLNG contracts. For context, the dividend yield of 2.49% (as of August 2025) is modest compared to the energy sector average of 3.39%, but it's competitive given the company's growth focus.

FLNG Projects: The Engine of Future Cash Flow

The real catalyst for Golar's long-term value lies in its FLNG portfolio. The FLNG Gimi, now in its post-commercial operations phase, is generating a $3 billion Adjusted EBITDA backlog over its 20-year lease with BP. This asset, which achieved its Commercial Operations Date in June 2025, is already offloading its eighth LNG cargo and is expected to stabilize operations as infrastructure interfaces normalize.

Meanwhile, the MKII FLNG (Fuji LNG) conversion is on track for Q4 2027 delivery. With a $2.2 billion price tag and 70% equity funding to date, this project is a high-stakes bet on Argentina's energy market. The vessel will join the FLNG Hilli, which is set to begin commercial operations in 2027 under a $285 million annual charter plus a commodity-linked tariff. Together, these projects form a $700 million annual cash flow engine by 2028, assuming no major delays.

Risk Mitigation and Capital Discipline

Critics may point to Golar's 60% debt-to-equity ratio and negative levered free cash flow (-$311 million TTM) as red flags. However, the company's exit from the LNG shipping segment—via the sale of Golar Arctic and Avenir LNG—has sharpened its focus on FLNG, where margins are higher and cash flow visibility is clearer. Additionally, the $1.2 billion sale-and-leaseback facility for FLNG Gimi, though delayed, could provide $530 million in net proceeds, further strengthening liquidity.

The key risk lies in project execution. Delays in commissioning FLNG Gimi or Fuji LNG could inflate costs and delay cash flow. However, Golar's track record—such as FLNG Hilli's 132nd successful cargo delivery—demonstrates operational expertise. The company's ability to secure 20-year charters with creditworthy partners like BP and Southern Energy also mitigates counterparty risk.

Investment Thesis: A High-Conviction Play

For investors seeking a blend of income and growth, Golar LNG offers an attractive risk-reward profile. The dividend provides immediate returns, while the FLNG backlog ensures a clear path to earnings expansion. The company's debt refinancing efforts and focus on equity-funded projects (e.g., $700 million spent on Fuji LNG to date) suggest a cautious approach to leverage.

However, patience is required. The full value of Golar's FLNG investments will materialize in 2027–2028, when Hilli and Fuji LNG begin generating consistent cash flow. Until then, the stock may trade at a discount to its intrinsic value, offering a buying opportunity for those comfortable with a 2–3 year horizon.

Conclusion

Golar LNG's strategic dividend and FLNG growth plan reflect a company that understands the delicate balance between rewarding shareholders and investing in the future. While execution risks exist, the scale of its EBITDA backlog and the durability of its long-term contracts make it a compelling case study in capital allocation. For investors who can stomach near-term volatility, GLNG represents a high-conviction opportunity to participate in the next phase of the LNG revolution.

Investment Advice: Consider a position in GLNG for a 2–3 year horizon, with a focus on its FLNG projects' commercialization. Monitor the progress of the Fuji LNG conversion and the finalization of the FLNG Gimi sale-and-leaseback facility for key catalysts.