Declining cash flow is worrisome, particularly for a company that pays a big dividend. In 2024, Flex LNG paid out $162 million in dividends for an 88% payout ratio. That's too high. It doesn't give much room if free cash flow continues to decline. Considering that free cash flow is projected to drop to $152 million in 2025, that means the company would not be able to afford its current dividend this year. Making matters worse is the forecast that the company's total dividend payout is expected to increase to $176 million for a payout ratio of 116%. In other words, for every $1 of free cash flow, Flex LNG would pay out $1.16. That is not sustainable. So far, things aren't looking good for Flex LNG's dividend safety. Is there anything that can salvage its eye-popping dividend? |
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