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2 Tickets To Paradise: Hoegh LNG Partners LP Yields 10% And 8%

Dec. 01, 2018 9:15 AM ETHöegh LNG Partners LP (HMLP), HMLPF69 Comments


  • HMLP has two well-covered high-yield vehicles.
  • Its common yields over 10%, with 1.17X coverage, and its preferred yields over 8%, with strong 5.88X coverage.
  • Since it's a C-Corp, HMLP issues a 1099 at tax time - no K-1.
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If you're looking for multiple income choices, Hoegh LNG Partners LP (NYSE:HMLP) may be just the "ticket." It offers a common payout which yields 10.35% and a preferred payout with an 8.7% yield.

HMLP is the only publicly traded pure play on FSRUs. FSRU stands for "Floating Storage & Regasification Unit" and it's a rapidly growing presence in the LNG shipping industry. HMLP's parent/sponsor, Höegh LNG Holdings Ltd., is the largest provider of FSRUs in the market. FSRU leasing/chartering solves many problems for charterer companies and countries. It's slow and expensive to build an LNG import terminal, so FSRUs are being increasingly used to give countries access to LNG.

HMLP operates on long-term contracts with a current average remaining length of 11 years:

(Source: HMLP site)

Common Distributions:

HMLP pays in a Feb-May-Aug-Nov. cycle, and should go ex-dividend again in late January/early February 2019. At $17, it yields 10.35%.

HMLP had good 1.16X coverage in Q3 '18 and has averaged 1.17X over the past four quarters:

HMLP's distributions have averaged 9.33% annual growth since 2015, but most of that came in 2016. Since 2017, the distribution has only grown from $.4125 to the current $.44/quarter:

(Source: HMLP site)


Since it's a C-Corp, HMLP issues a 1099 at tax time: "The Partnership has elected to be treated as a C-Corporation for tax purposes (our investors receive the standard 1099 form and not a K-1 form)."

"Distributions we pay to U.S. unit holders will be treated as a dividend for U.S. federal income tax purposes, to the extent the distributions come from earnings and profits ("E&P") and as a non-dividend distribution or a return of capital ("ROC") to the extent the distributions exceed E&P." (Source: HMLP site)

In 2017, HMLP's ROC ranged between $.188 and $.1979 per quarterly payout. Investors get the benefit of sheltered

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This article was written by

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Target 5-10% yields backed by solid earnings for better portfolio income.

Robert Hauver, MBA, was VP of Finance for an industry-leading corporation for 18 years, and publishes SA articles under the name DoubleDividendStocks. TipRanks rates DoubleDividendStocks in the Top 25 of all financial bloggers, and Seeking Alpha rates us in the Top 5 of several categories, including Dividend Ideas, Basic Materials, and Utilities. 

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Analyst’s Disclosure: I am/we are long HMLP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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