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Cheniere (LNG) Hikes Dividend, Buyback in Strategic Boost

Zacks Equity Research
·3 min read

Cheniere Energy LNG, a leading U.S. exporter of liquefied natural gas (“LNG”), has announced a significant enhancement to its capital allocation strategy. The company has approved an additional $4 billion in share repurchase authorization through 2027 and plans to increase its quarterly dividend by 15% to an annualized rate of $2.00 per common share, starting in the third quarter of 2024.

Progress on the “20/20 Vision” Plan

Cheniere’s 20/20 Vision capital allocation plan, introduced in 2022, has made substantial progress. The plan aims to deploy over $20 billion toward growth, capital returns, and maintaining an investment-grade balance sheet.

Some of the key achievements under the plan include:

Corpus Christi Stage 3 Project: Cheniere Energy has completed more than 60% of this critical initiative, with first LNG set to be available later this year.

Share Repurchases: The company has brought back some 10% of shares outstanding since the plan's inception.

Dividend Growth: Cheniere Energy has raised its dividend by over 30% in total, demonstrating a strong commitment to shareholder returns.

Credit Upgrades: The company has achieved investment-grade ratings across the corporate structure, reflecting its financial stability and discipline.

Global LNG Market Dynamics

The worldwide LNG consumption has been on an upward trajectory, driven by the need for cleaner energy alternatives and geopolitical shifts. The U.S. emerged as the top LNG exporter in 2023, filling the gap left by reduced supplies from Russia due to Western sanctions. Cheniere Energy, with its significant liquefaction capacity and strategic investments, is well-positioned to capitalize on this growing demand.

Dividend & Buyback Outlook

The increased share repurchase authorization and dividend hike are part of a broader strategy to enhance shareholder value while supporting accretive growth projects. Further, Cheniere aims to consistently generate over $20 per share in distributable cash flow, leveraging its strategic investments and strong market position.

About the Company

Being the first company to receive regulatory approval to export LNG from its 2.6 billion cubic feet per day Sabine Pass terminal, Cheniere Energy enjoys a distinct competitive advantage.

Cheniere Energy's strategic moves to increase share buybacks and dividends are a testament to its strong financial health and commitment to delivering value to shareholders. As global LNG demand continues to rise, Cheniere is poised to play a pivotal role in meeting this demand, backed by its solid operational foundation and strategic investments.

3 Energy Stocks to Buy

Cheniere Energy carries a Zacks Rank #3 (Hold) at present. Meanwhile, investors interested in the Oil/Energy space could benefit from accumulating stocks like Sunoco LP SUN, ProPetro Holding PUMP and Tullow Oil TUWOY. Sunoco currently sports a Zacks Rank #1 (Strong Buy), while ProPetro and Tullow carry a  Zacks Rank #2 (Buy) each.

You can see the complete list of today’s Zacks #1 Rank stocks here.

We believe that oil’s current levels of just under $80 allow long-term-oriented market participants to buy shares in quality companies at attractive prices.

Sunoco LP: The Zacks Consensus Estimate for 2024 earnings of Sunoco indicates 99.7% growth.

SUN is valued at around $5.3 billion. Sunoco has seen its stock rise 24.1% in a year.

ProPetro Holding: Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has moved up 36.7%.

ProPetro Holding is valued at around $991 million. PUMP has seen its stock rise 16.3% in a year.

Tullow Oil: TUWOY is valued at some $663.4 million. Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has moved up 20%.

Tullow Oil enjoys a Value, Growth and Momentum Score of A, B and B, respectively, each helping it round out with a VGM Score of A. TUWOY shares have gained 40.9% in a year.

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