Are there high dividend stocks worth buying in the LNG shipping sector?

Dividend: $0.63/quarter

Dividend yield: 6.78%

Recent EPS: $1.45

Dividend payout ratio: 173% ($2.52 annual dividend / $1.45 recent EPS)  This is not good.  Expect a dividend cut in the not too distant future.

Earning power: $0.53 average earnings @ 58.81 million shares

(earnings adjusted for changes in capitalization; TGP has issued some shares over the years)

            EPS                   Net inc.             Adj. EPS

2006     ($0.28)             ($9.591 M)        ($0.16)

2007     $0.45                $25.662 M         $0.44

2008     $0.36                $19.486 M         $0.33

2009     $0.85                $42.145 M         $0.72

2010     $1.48                $78.728 M         $1.34

Five year average EPS $0.53

Consider buying below $6.36 (12 times average earnings)

Consider selling above $10.60 (20 times average earnings)

TGP is trading for 70 times average earnings.  This is highly speculative.

Balance sheet: Stagnant and unexciting; weak current financial strength

Image008

Book value per share: $15.23  TGP traded below its book value as recently as late 2008.

Price to book value ratio: 2.43 (not too bad)

Current ratio: 0.27 (over 2.0 is good)

Quick ratio: 0.14 (over 1.0 is good)

Golar LNG Ltd. (GLNG)

Market price: $37.65

Shares: 68.12 M

Market capitalization: $2.56 billion

Dividend record: spotty, usually $0.25/quarter, no earnings to pay the dividend!!

Image009

Dividend: $0.25 quarterly

Dividend yield: 2.6% ($1.00 annual dividend / $37.65 share price)

EPS: none

Dividend payout ratio: can’t be computed without earnings

Earning power: $0.65 per share @ 68.12 million shares

(earnings adjusted for changes in capitalization; GLNG has kept its number of shares very constant)

            EPS       Net inc.             Adj. EPS

2006     $1.05    $71.673 M         $1.05

2007     $2.07    $136.204 M       $2.00

2008     ($0.15) ($9.989 M)        ($0.15)

2009     $0.34    $23.082 M         $0.34

2010     $0.01    $0.384 M           $0.01

Five year average earnings $0.65

Consider buying at $7.80 (12 times average earnings)

Consider selling at $13.00 (20 times average earnings)

GLNG is trading at 57.92 times average earnings.  This is highly speculative.

Balance sheet: horrible trending downward

Image012

Book value: $6.09

Price to book value ratio: 6.18 (bad because the stock is priced six times more than the capital invested in the company)

Current ratio: 0.78 (over 2.0 is good)

Quick ratio: 0.57 (over 1.0 is good)

Disclosure – I don’t own positions in either of these stocks.

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Published in: on July 18, 2011 at 5:44 pm  Leave a Comment  

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