Natural gas prices have not been at their current level of around $8.00 per million BTUs since August of 2008, nearly 13 years ago, when the price was retreating from a high of near $13.50 as the fracking boom in production was about to begin. The driving force behind the increase of about $5 per million BTUs in the past two years has been a combination of higher demand for cleaner-burning gas and, most recently, the Russian invasion of Ukraine.
Russia, the leading exporter of natural gas to Europe, has threatened to cut off gas supplies unless importing nations pay for the gas in rubles. Russia stopped delivering gas to Poland and Bulgaria last week because the two countries refused to pay in rubles. As Poland and Bulgaria already had been planning to eliminate imports of Russian gas, the impact on the two countries is not expected to be severe.
Most of Europe’s supply of Russian gas is delivered by pipeline. Most of that will be replaced by liquefied natural gas (LNG) from the United States, Qatar or Australia. That implies tankers, liquefaction plants in the exporting countries, and regasification facilities in the importing countries. All of this costs large amounts of cash and takes time to build.
While all that is happening, some publicly traded companies will be getting premium prices for their transportation capabilities, and some are paying significantly higher than average dividends.
A note of caution. Most of these stocks are not terribly liquid and, for several, institutions hold the majority of shares outstanding. One more note: the boom-bust cycles in oceangoing shipping stocks are almost legendary. Caveat emptor.
Here is a look at six high-paying energy transportation stocks.
Antero Midstream
This Denver-based company’s natural gas network collects and processes gas from wells in Ohio and West Virginia (the Marcellus and Utica shale plays) that are operated by Antero Resources. In a joint venture with MPLX, the two firms have a 40,000-barrel per day natural gas liquids (NGL) fractionation capacity with daily processing capacity of 1.6 billion cubic feet per day.
Antero Midstream Corp. (NYSE: AM) has a market cap of $5.07 billion and an enterprise value of $8.2 billion. There are just over 478 million shares outstanding, and average daily trading volume is around 4.2 million shares. The stock posted its 52-week high in late March.
Antero Midstream’s current quarterly dividend payment is $0.225, with a yield 8.5%. The company has paid the same dividend for the past five quarters, and its forward yield is expected to remain unchanged. Antero’s payout ratio is 131.83%, and total shareholder return for the past year was 31.5%.
MPLX
MPLX L.P. (NYSE: MPLX) is an operating subsidiary of Marathon Petroleum. The company’s Capline pipeline transports refined products from Illinois to the Gulf Coast, and the company also owns and operates other product pipelines. The 632-mile Capline can transport 300,000 barrels of crude oil per day and has a potential capacity of 1.3 million daily barrels.
MPLX is a master limited partnership (MLP) with a market cap of $33.04 billion and an enterprise value of $55.35 billion. There are 1.01 billion common units outstanding, and the average daily trading volume is about 1.9 million shares. The units posted their 52-week high in mid-April.
The company currently pays a quarterly distribution of $0.705. The forward yield is 8.66%. MPLX’s payout ratio is 97.04%, and the total shareholder return over the past 12 months was 33.21%.
Flex LNG
Bermuda-based Flex LNG Ltd. (NYSE: FLNG) owns and operates 13 LNG tankers, each of which has a capacity of around 174,000 cubic meters of LNG. The company will report first-quarter results next Wednesday.
Flex LNG has a market cap of around $1.54 billion and an enterprise value of $2.88 billion. There are 53.13 million shares outstanding, and the daily trading volume recently has surged to an average of around 615,500. The stock posted a 52-week high in mid-April.
The company currently pays a quarterly dividend of $0.75. Over the past four quarters, shareholders were paid total dividends of $2.30, representing a yield of 7.78%. Flex’s payout ratio is almost 61%, and the total shareholder return for the past year was 171.92%. If Flex maintains its current dividend payment for the next two quarters, the forward yield is 10.15%.
NuStar Energy
San Antonio-based NuStar Energy L.P. (NYSE: NS) transports refined petroleum products and crude oil over more than 5,250 miles of pipelines and has storage capacity of 44.2 million barrels at 29 terminals and storage facilities. The company also 2,000-mile anhydrous ammonia pipeline system.
NuStar’s market cap is $1.65 billion, and its enterprise value is $6.28 billion. The company, like MPLX, is organized as an MLP and has a total of 110.1 million common units outstanding, with a daily average trading volume of about 592,000 units.
The company currently pays a quarterly distribution of $0.40 per common unit, for a yield of 10.71%. NuStar’s payout ratio is 792.18%, and its total shareholder return over the past year was negative 14.78%, thanks largely to a share price decline of 14.2%.
Green Plains Partners
This Omaha-based fuel storage and transportation firm is another MLP, but with a twist. Green Plains Partners L.P. (NASDAQ: GPP) transports and stores ethanol in a leased fleet of more than 2,800 railcars with a total capacity of 85.2 million gallons. The company also owns 32 ethanol storage facilities and 13 ethanol production plants with enough capacity to produce about 1.1 billion gallons of ethanol a year.
The company’s market cap is $336.8 million, and its enterprise value is $421.64 million. There are 23.21 million common units outstanding, and daily trading volume averages around 86,570 shares. The common units have added about 31.8% to their value over the past 12 months.
Green Plains recently raised its quarterly distribution payment to $0.44 per common unit, yielding 12.32% at the current stock price. The company’s payout ratio is 66.48%, and total shareholder return for the past year was 28.82%.
Dorian LPG
Connecticut-based Dorian LPG Ltd. (NYSE: LPG) operates a fleet of 23 very large gas carriers (VLGCs) that ship liquified petroleum gas (LPG) around the world. Each tanker has a capacity of 84,000 cubic meters of LPG.
Dorian has a market cap of $603.69 million and an enterprise value of $1.08 billion. There are just 40.14 million shares outstanding, and the average daily trading volume is around 499,000 shares. Over the past year, the share price has risen by nearly 32%. About 85% of the outstanding shares are held by institutions.
The company has paid a quarterly dividend of $1.00 per share in each of the past two quarters, the first in which it had made payments. That works out to a yield of 13.59%. Annualized, the yield would be 26.6%. The company’s payout ratio is 49.9%, and total shareholder return for the past year was 25.05%.
Originally posted at 24/7 Wall St.
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