FLNG - Flex LNG: The New 13% Yield Looks Amazing But Fortunes Could Turn On A Dime

• Flex LNG started 2021 on a very positive note with their dividend increasing 200% and thus giving them a very high yield of 13% if sustained.
• Whilst this sounds wonderful for income-hungry investors, they should remain cautious.
• The company has highly volatile earnings and thus cash flow performance, which makes it difficult to consistently cover any given dividend payments.
• More concerningly, their leverage metrics are through the roof and even if their recent acquisitions are ignored, their leverage remains very high.
• This means that they have no financial safety net in the event of a downturn in LNG shipping rates and thus given the uncertainties from volatility, I believe that a neutral rating is appropriate.

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