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What are we looking for?

Sustainable dividends from companies ready to satisfy rising demand for liquefied natural gas (LNG).

The screen

Canada’s TC Energy Corp. topped analyst earnings estimates this week, partly on the strength of its natural gas shipments to LNG export plants in the U.S.

LNG is natural gas cooled to a liquid form and transported by tanker. Europe’s step away from gas piped in from Russia and the continent’s still urgent need to replenish its depleted natural gas stores have lifted global prices.

TC Energy, in particular, is poised to further benefit from its own investment in LNG, having completed the 670-kilometre-long Coastal GasLink pipeline. The company will pump natural gas from northeastern B.C. to a new LNG facility in Kitimat, B.C. – now about 85-per-cent complete. Starting in 2025, tankers are expected to carry the plant’s stored LNG to Asia, where gas has long sold at a premium to North American prices.

TC Energy is just one of several players now ready to tap the long-term positive outlook for LNG. Our search for others started with a list of leading companies supplying, processing and ultimately shipping LNG. From there, we applied our TSI Dividend Sustainability Rating System to the short list of income payers among them. The rating system awards points to a stock based on key factors:

  • one point for five years of continuous dividend payments – two points for more than five;
  • two points if it has raised the payment in the past five years;
  • one point for management’s commitment to dividends;
  • one point for operating in non-cyclical industries;
  • one point for limited exposure to foreign currency rates and freedom from political interference;
  • two points for a strong balance sheet, including manageable debt and adequate cash;
  • two points for a long-term record of positive earnings and cash flow to cover dividends;
  • one point if the company is an industry leader.

Companies with 10 to 12 points have the most secure dividends or the highest sustainability. Those with seven to nine points have above-average sustainability; four to six points, average sustainability; and one to three points, below average sustainability.

More about TSI Network

TSI Network is the online home of The Successful Investor Inc., the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Stocks in LNG sector with sustainable dividends

Ranking*CompanyTickerDiv. Sustain. RatingPointsDiv. Yld. (%)Mkt. Cap. ($ Bil.)**1Y Ttl. Rtn. (%) Recent Price ($)**
1TC Energy Corp.TRP-THighest117.549.4-17.149.84
2Woodside Energy Group Ltd. (ADR)WDS-NAbove Average810.240.6-16.321.05
3BP PLC (ADR)BP-NAbove Average84.8101.73.534.90
4Chevron Corp.CVX-NAbove Average84.2269.6-23.1142.40
5Shell PLC (ADR)SHEL-NAbove Average83.9220.514.664.42
6Exxon Mobil Corp.XOM-NAbove Average83.7413.0-9.6102.93
7Cheniere Energy Inc.LNG-NAbove Average81.040.3-1.9170.22
8Golar LNG Ltd. GLNG-QAbove Average74.62.3-19.421.99

Source: Dividend Advisor.

*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements.

**Share price and market cap are in native currency

Our TSI Dividend Sustainability Rating System generated eight stocks. Cheniere Energy Inc. LNG-N, based in Houston, is a leading U.S. LNG producer and one of the largest global producers. The company operates two export LNG facilities along the U.S. Gulf Coast, at Sabine Pass and Corpus Christi. BP PLC BP-N and Shell PLC SHEL-N, both headquartered in London, are among the world’s leading natural gas and LNG suppliers and also operate sizable LNG shipping fleets. Pipeline operator TC Energy Corp. TRP-T, based in Calgary, has strong cash flow and growth projects to keep dividends rising, including major supply deals with big U.S. LNG export plants. California-based Chevron Corp. CVX-N has a large and growing LNG portfolio, including import and export terminals. It also owns interests in three LNG projects, including Australia’s huge Gorgon LNG facility. Texas-based Exxon Mobil Corp. XOM-N owns interests in several LNG projects across the world, including part of Gorgon LNG, as well as plants in Papua New Guinea and Qatar. Golar LNG Ltd. GLNG-Q, headquartered in Bermuda, engages in LNG shipping, as well as developing liquefaction projects. And finally, Australia’s Woodside Energy Group Ltd. WDS-N led the development of the LNG industry in Australia. Today, it’s a major global supplier.

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 27/02/24 4:00pm EST.

SymbolName% changeLast
TRP-T
TC Energy Corp
+0.45%53.33
WDS-N
Woodside Energy Group Ltd
+1.32%19.99
BP-N
BP Plc ADR
+0.28%35.42
CVX-N
Chevron Corp
-1.48%152.16
SHEL-N
Royal Dutch Shell Plc ADR
+0.03%63.4
XOM-N
Exxon Mobil Corp
-0.21%104.03
LNG-N
Cheniere Energy
-1.17%153.18
GLNG-Q
Golar Lng Ltd
+0.05%21.16

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