Hoegh LNG Partners is maintaining its dividends during the pandemic, despite Hoegh LNG pulling its own payout this month.
The US-listed FSRU-owning partnership said it will go ahead with a $0.44 per unit cash distribution on 15 May, covering the first quarter.
The dividend equates to to an annualised distribution of $1.76 per unit, equal to a 16% return.
The LNG shipowner also announced a payout of $0.55 for each 8.75% Series A preferred unit.
"With the parent halting dividends completely we are surprised that [Hoegh Partners] does not follow suit with a reduction, considering the consolidated accounting," said Fearnley Securities, an investment bank.
"The lack of future dropdowns and the weak equity pricing also leaves limited growth opportunities."
Cash running out?
Fearnley analysts Espen Landmark Fjermestad, Peder Nicolai Jarlsby and Ulrik Mannhart added that they believe, at the current dividend rate, Hoegh Partners could see its cash balance turn negative in the second half of next year.
This is due to the mismatch between debt amortisation profiles of 15 to 18 years and depreciation and amortisation on a 35-year basis, they said.
"Over time we believe it's prudent to match distributions with underlying cash generation, which on our estimates would be 20-25 cents. Still, an attractive yield and matched by a 12-year average contract backlog," the analysts said.
Fearnley still has the partnership's shares at a buy recommendation.
Hoegh LNG pulled its dividends earlier in April, looking to hoard cash in the face of uncertainty caused by coronavirus.
The Oslo-listed floating storage and regasification unit specialist said future dividends were "suspended in full until further notice".
Several companies in the maritime space have already scrapped or reduced their dividends. The most high-profile is Clarksons.
Hoegh Partners said it would also implement a cost-saving plan with special focus on overhead and vessel operating costs, targeting $9m to $11m in savings for 2020.
