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13.7% Yield With Over 9 Years Of Coverage: Dynagas LNG Partners Preferred

Published Tue, 11 Jun 2019 03:13:30 -0400 on Seeking Alpha

Dynagas (NYSE: DLNG) released earnings on June 5 and had its conference call on June 6. Performance was decent, yet a bit worse than expected, with distribution coverage at 1.3x (20%+ DCF yield), and $112 million in free cash available at end of quarter (before paying common and preferred dividends).

Source: Dynagas LNG Partners Presentation
The big news was despite DCF and cash coverage ratios well above 1, Dynagas LNG Partners will probably be eliminating the common distribution as part of a deal to refinance debt coming due in October 2019. Dynagas LNG Partners' common stock plummeted 18% in response, but the preferred B (DLNG.PB) held up fairly well only dropping about 5.5%. I did my part to help produce this dichotomy, starting to soak up more preferred B shares in the high $15s and low $16s during and after the call. I could be wrong, but I continue to think the preferred quite attractive.
For those who are unfamiliar with Dynagas LNG Partners or the Dynagas LNG Partners Cumulative Preferred B shares, I suggest you read this article which discusses the company in more depth. A more cautionary stance is also available from Henrik Alex here.
Given the brief outline and links above, let's now skip forward to what I suspect most readers care about,
Will DLNG be able to refinance its debt due this October and thus remain a separate entity? Will the preferred distribution need to be cut? Debt Refinance vs. Going Private:
The big question for many... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
TEEKAY LNG PARTNERS LP 16.05   29.2 0.55 0.76 4.78
TEEKAY 4.42   0.0 -1.53 0.11 2.53