Global natural gas demand (NGZ24) is bouncing back, with a 2.5% rise expected this year and similar growth next year, driven by booming Asian markets and Europe’s industrial recovery. The U.S. is playing a pivotal role, positioning natural gas as a key “bridge fuel” as alternative energy sources scale up. This shift in market dynamics opens up enticing opportunities for dividend-seeking investors, and Cheniere Energy, Inc. (LNG) is set to capitalize.
Last week, Cheniere reported its Q3 earnings, surpassing Wall Street’s bottom-line projections significantly. More importantly, the company raised its full-year core profit and cash flow forecasts. With analysts bullish on its prospects, Cheniere is emerging as a standout in the energy sector, combining growth potential with solid dividends. Let’s dive deeper.
About Cheniere Energy Stock
Valued at $44.4 billion, Houston-based Cheniere Energy, Inc. (LNG) is the top domestic liquefied natural gas (LNG) producer. As the world’s second-largest LNG operator, it fuels global markets with liquefied natural gas from its Sabine Pass and Corpus Christi facilities.
With ongoing expansion projects boosting production, Cheniere secures long-term contracts, ensuring stable revenue and a solid foothold in the energy game. In a volatile energy market, its strategic growth and reliable sales make Cheniere a force to reckon with in LNG.
LNG stock has gained 19.6% over the past 52 weeks, rallying 29.2% over the past six months. In fact, in today's trading session, the oil and gas giant hit a new all-time high of $202.77, marking a standout moment in its impressive run.
On Oct. 29, Cheniere bumped up its dividend by 15% to $0.50 per share. This brings its forward annualized dividend to $2.00 per share, yielding a steady 1.06%. Plus, with a low payout ratio of 11%, Cheniere shows a strong commitment to shareholders, blending value and growth in one solid package.
The company’s shareholder-friendly moves do not stop at dividends. In Q3, Cheniere repurchased around 1.6 million shares for roughly $282 million, showcasing its commitment to increasing shareholder value. For investors eyeing both stability and returns, this natural gas exporter offers a rare mix of underappreciated value and steady income.
Cheniere Climbs After Q3 Earnings Beat
On Oct. 31, the natural gas exporter delivered an impressive Q3 earnings beat, sending its stock up 5.2%. Revenue hit $3.8 billion, but it was the earnings per share (EPS) of $3.93 - beating Wall Street’s estimates by a staggering 119.6% - that stole the spotlight. This performance reflects Cheniere's effective cost management in the face of fluctuating prices and regulatory shifts.
Higher spot LNG prices in Asia and a rise in exports fueled Cheniere’s growth, with the company exporting 158 LNG cargoes - a 4% increase over last year. However, adjusted EBITDA dipped to $1.5 billion from $1.7 billion, partly due to competitive LNG markets and spot price pressures.
Cheniere’s financial strength is rock-solid, with $10.7 billion in credit facilities and nearly $3.1 billion in cash reserves. Long-term contracts covering 95% of production help to shield it from commodity price volatility, while $820 million in quarterly distributable cash flow (DCF) supports dividend payouts. Stability and resilience add to Cheniere’s appeal in a turbulent energy market.
Moreover, to meet rising global demand, Cheniere is ramping up its production capacity. The Corpus Christi Stage 3 expansion will add over 10 million tons per annum (mtpa), boosting total production to 45 mtpa. By next year, three new trains will be operational, adding 3 million metric tons of LNG to the spot market - a timely addition that will also help fund the expansion.
Separately, Cheniere reports "good progress" on its proposed 20 mtpa expansion at Sabine Pass, Louisiana.
The company also raised its full-year guidance, underscoring its resilience. It now forecasts adjusted EBITDA between $6 billion and $6.3 billion, while DCF expectations were increased to a range of $3.4 billion to $3.7 billion. With strategic expansions and stable financial health, Cheniere is positioning itself to thrive in a dynamic LNG market.
Analysts tracking Cheniere predict its fiscal 2024 EPS to reach $10.56 and surge 2.7% year over year to $10.84 in fiscal 2025.
What Do Analysts Expect for Cheniere Stock?
TD Cowen just lifted its price target on Cheniere Energy from $192 to $202, and reaffirmed its “Buy” rating, citing the company’s upwardly revised DCF cash flow forecast and aggressive share buybacks as key factors behind the upward revision. Going forward, analyst Jason Gabelman sees potential for LNG to deploy cash toward additional buybacks, debt reduction, and Stage 3 funding.
LNG stock has a consensus “Strong Buy” rating overall. Among the 19 analysts in coverage, 16 suggest a “Strong Buy,” two advise a “Moderate Buy,” and one recommends a “Hold.”
The mean price target for LNG is $212.37, indicating an upside potential of 5% from Wednesday’s close. The Street-high target price of $255 implies the stock could rally as much as 26.2%.
