FLEX LNG: 12%-Yielder Thumping Broader Market in 2025
June 6, 2025
FLEX LNG Minimum Backlog Stands at 59 Years
In the 19th century, coal was the primary energy source, but it gave up that title to oil in the 20th century. Since 2000 though, there has been a gradual transition to natural gas; the cleanest burning and most environmentally sustainable fossil fuel.
By 2030, natural gas is expected to overtake crude oil and coal as the biggest fossil fuel. This helps explain why demand for natural gas has more than doubled over the last 10 years. Looking ahead, by 2025, the world’s energy demand will be twice as big as it was in 2000. (Source: “Why invest in FLEX LNG video,” YouTube, last accessed June 3, 2025.)
Greater demand for liquified natural gas (LNG) means greater demand for LNG shipping companies. Qatar is the largest exporter of natural gas (the U.S. isn’t too far behind), which means there will be a need for more vessels making longer trips. And that’s where FLEX LNG Ltd (NYSE:FLNG) comes in.
FLEX LNG is a marine shipping company focused on the LNG market. Its fleet consists of 13 LNG carriers, with an average age of just 5.5 years. It has built up a significant contract backlog, with 11 of its 13 vessels on long-term, fixed-rate charter contracts and one vessel on variable hire time charter. (Source: “First Quarter 2025 Results Presentation,” FLEX LNG Ltd, May 21, 2025.)
In late 2024, the company strengthened its earnings foundation by securing up to 37 years of new contract backlog for three of its vessels. As a result, its total minimum firm backlog now stands at 59 years. With extension options, this number could potentially expand to 88 years.
A backlog of 59 years to maybe 88 years obviously provides FLEX LNG and FLNG shareholders with strong earnings visibility.
Solid Q1 Results
FLEX LNG delivered solid first-quarter results, with vessel operating revenues of $88.4 million. The company’s average time charter equivalent (TCE) rate was $73,891 per day, down slightly from $75,319 per day in the fourth quarter of 2024. (Source: “First Quarter 2025 Earnings Release,” FLEX LNG Ltd, May 21, 2025.)
Its net income came in at $18.7 million, or $0.35 per share. Adjusted net income was $29.4 million, or $0.54 per share, compared to $30.8 million, or $0.57 per share, in the fourth quarter of 2024.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were down slightly at $65.6 million, compared to $68.7 million in the previous quarter. FLEX LNG finished the quarter with an ample cash position of $410.0 million and no debt maturities prior to 2028.
Declares Quarterly Dividend of $0.75/Share
Thanks to solid earnings, a substantial backlog, a strong balance sheet, and cash flow from long-term, fixed-rate contracts and limited, near-term market exposure, FLEX LNG has been able to provide investors with a reliable dividend payout. (Source: “Dividend,” FLEX LNG Ltd, last accessed June 3, 2025.)
This includes a first-quarter payout of $0.75 per share, or $3.00 per share on an annual basis, for a current forward dividend yield of 12.31%. This represents the 15th ordinary quarterly dividend of $0.75 per share. Including special dividends, the company has paid out approximately $650.0 million since the fourth quarter of 2021.
FLNG Stock Up 11% in 2025
FLNG stock has been a little volatile over the last number of years, though that’s not a big surprise, as these kinds of stocks tend to fluctuate with supply/demand metrics and underlying commodity prices.
While the stock has experienced periods of volatility since the start of 2025, due in part to broader economic uncertainties about trade wars, FLNG has been rallying since April, putting it up 14% over the last three months and 11% year to date.
These numbers far outpace what’s going on with the S&P 500 and NASDAQ. And, according to Wall Street analysts, FLNG should hold onto and build on these gains over the coming quarters.
Chart courtesy of StockCharts.com
The Lowdown on FLEX LNG Ltd
FLEX LNG Ltd is a great marine shipping company with a growing, modern fleet of vessels that should help it take advantage of significantly growing LNG demand. It has, in the words of management, a “fortress balance sheet,” which includes stable cash flows, available capital, and ample liquidity.
FLEX LNG also has an incredible, minimum firm backlog of 59 years, which could grow to 88 years with the charterer’s extension option. This bodes well for longer-term earnings and cash flow growth, which should support a growing dividend as well.
That’s good news for the 241 institutions that hold 24.6% of outstanding FLNG shares. That number isn’t enormous, but it’s balanced out by the high insider ownership of 42.7%. This kind of high insider ownership suggests that insiders are more motivated to deliver. (Source: “FLEX LNG Ltd. (FLNG), Yahoo! Finance, last accessed June 3, 2025.)
