{"id":25763,"date":"2026-02-19T13:53:00","date_gmt":"2026-02-19T13:53:00","guid":{"rendered":"https:\/\/finderica.com\/?p=25763"},"modified":"2026-02-19T13:53:00","modified_gmt":"2026-02-19T13:53:00","slug":"will-its-11-yield-sink","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=25763","title":{"rendered":"Will Its 11% Yield Sink?"},"content":{"rendered":"
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A year ago, I looked at the dividend safety of natural gas shipper Flex LNG<\/strong> (NYSE: FLNG). At the time, it had a whopping 13% yield. However, falling free cash flow and a payout ratio that exceeded 100% meant the stock received an \u201cF\u201d rating.<\/p>\n

Fortunately for shareholders, the quarterly dividend has remained intact at $0.75 per share, giving the stock a current yield of more than 11%.<\/p>\n

But can that $0.75 dividend stay afloat?<\/p>\n

When I reviewed the stock last year, one problem was that free cash flow was projected to fall to $152 million in 2025 from $183 million the previous year. The actual numbers in 2025 were even worse than expected.<\/p>\n

Flex LNG generated just $141 million in free cash flow in 2025 while paying out $162 million in dividends. That came out to a payout ratio of 115%. In other words, for every $1 of free cash flow it made, the company paid out $1.15.<\/p>\n

Think of it like this: If you make $100,000 a year and spend $115,000, that extra $15,000 has to come from somewhere. You either have to take it out of savings or borrow it.<\/p>\n

The same thing goes for companies. When a company\u2019s amount paid in dividends exceeds its free cash flow by that much, it\u2019s a big concern.<\/p>\n

This year, free cash flow is forecast to drop further to $131 million. Flex LNG is projected to pay shareholders $159 million in dividends, increasing the payout ratio even more to 121%.<\/p>\n

\"Chart:<\/a><\/p>\n

Falling free cash flow and a too-high payout ratio mean the dividend is even less safe than it was a year ago.<\/p>\n

Flex LNG shareholders should not be surprised if the dividend is reduced in the next year.<\/p>\n

Dividend Safety Rating: F<\/strong><\/p>\n

\"Dividend<\/p>\n

What stock\u2019s dividend safety would you like me to analyze next? Leave the ticker in the comments section.<\/p>\n

You can also take a look to see whether we\u2019ve written about your favorite stock recently. Just click on the word \u201cSearch\u201d at the top right part of the Wealthy Retirement<\/em> homepage, type in the company name, and hit \u201cEnter.\u201d<\/p>\n

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds, or closed-end funds.<\/p>\n<\/p><\/div>\n