Welcome to our new post! Today, in this article, we will unveil which are the best natural gas dividend stocks which investors should buy hand over fist.
Before listing out the stocks, do you know how the energy sector has performed in the prior year?
In the year 2023, energy stocks in the US saw a strong and abrupt downturn. Such sort of fall was a significant change in comparison to the previous year in which this sector was leading the way in S&P 500 index. Energy industry has been transformed into one of the worst-performing sectors in 2023 as its performance was behind only utility stocks.
S&P 500 Energy index saw a decline of more than ~4% as compared to overall performance of S&P 500, which saw a strong rise of 24% during same period.
The US natural gas futures declined significantly in 2023, which exhibits most substantial percentage fall since 2006. Such kind of decline was mainly because of factors, such as exceptionally high production levels, several reserves, along with the mild winter season.
All said and done, where does the US stand? Should investors invest in the US natural gas companies? Let’s figure it out!
Data tracking LNG tankers has unveiled that US touched unprecedented monthly and yearly highs in LNG (liquefied natural gas) exports for the month of December. Wall Street analysts exhibited that such surge in exports supported the US in exceeding both Qatar and Australia. As a result of this, the US might potentially secure position as top and leading LNG exporter in 2023.
With this in mind, we will now have a look at the best natural gas dividend stocks.
1. Equinor ASA
The company has been tagged as a Norway-based integrated oil and gas company. The company is a publicly listed firm, but government retains a 67% stake.
It has released its financial results for 3Q23, with adjusted earnings coming at USD 8.02 billion and USD 2.73 billion post tax in 3Q23. Net operating income came in at USD 7.45 billion, while net income was USD 2.50 billion. In the said quarter, the company secured strong earnings and cash flow from operations.
For 3Q, the company has declared ordinary cash dividend of USD 0.30 per share, with extraordinary cash dividend of USD 0.60 per share together with of share buy-back USD 1.67 billion.
The delivered strong cash flow and earnings in quarter got by, with considerably lower gas prices as compaed to last year. The strong operational performance has aided the company is delivering high oil production from Johan Sverdrup and international portfolio.
Gas production from Norwegian continental shelf got impacted by planned maintenance and extended turnarounds. The company is expecting significant capital distribution and will deliver the total distribution of $17 billion in 2023. The company continues to contribute to energy security through the development of profitable oil and gas projects having low emissions from the production, via development of Rosebank field in UK and the start-up of Breidablikk field.
The company delivered total equity production of ~2,007 mboe per day in 3Q in comparison to 2,021 mboe per day in similar quarter of 2022.
Cash flow provided by operating activities, before taxes paid along with working capital items, came in at USD 11.3 billion for 3Q. It continues to maintain strong financial position, having adjusted net debt to capital employed ratio at -22.9% by 3Q end from -35.1% at the end of the second quarter of 2023.
2. New Fortress Energy Inc.
The company is an integrated gas-to-power company, which is mainly engaged in providing modern infrastructure solutions to develop cleaner, reliable energy while posting positive economic impact.
It has released its 3Q23 financial results, in which its adjusted EBITDA came in at $208 million and $895 million in first 9 months of 2023. Net income of the company was $62 million in 3Q and $334 million in first 9 months of 2023.
Since 2Q23, it has transitioned earnings from predominantly open cargos to ~100% contracted downstream assets and it completed sailaway, installation, and First Gas for its first FLNG asset located offshore Altamira, Mexico. It continues to expect a rise in earnings and decline in capex starting in 4Q23 as the company places ~$3.0 billion of invested capital projects online.
In October month, the company closed $856 million term loan at interest rate of SOFR + 5.00%. This was used to repay $400 million term loan with Morgan Stanley along with general corporate purposes. In November, it closed $575 million of asset level debt to construct its Barcarena power plant. On 7th November 2023, the company’s Board of Directors approved dividend of $0.10 per share. This had a record date of December 13, 2023 and payment date of 27th December 2023.
3. Energy Transfer LP
The company is a owner of large platform of crude oil, natural gas, and natural gas liquid assets mainly in Texas and the US midcontinent region.
It has confirmed about completion of previously announced merger with Crestwood Equity Partners LP. The was approved by Crestwood unitholders which was conducted on October 30, 2023.
The company has released financial results for the quarter ended September 30, 2023 or (Q3 FY 2023). It has reported net income of $584 million, and for 3 months ended September 30, 2023, net income per common unit came in at $0.15 per unit. Its adjusted EBITDA for 3 months ended September 30, 2023 was $3.54 billion against $3.09 billion for 3 months ended September 30, 2022.
Growth capital expenditures in 3Q came in at $418 million and its maintenance capital expenditures were $180 million.
The company expects FY23 adjusted EBITDA of between $13.5 billion – $13.6 billion, which includes the consolidated operations of Crestwood in November and December 2023.
While above are some of best natural gas dividend stocks, there are several other energy stocks which should perform well in 2024. Some of them include Enbridge Inc., BP p.l.c., etc.