Golar, symbol GLNG has been a very good trade for me.   I only trade for income and this is a high risk trade.   Total return if the call works is over 16%.   Immediate yield on the call premium along is 10%.

I believe in liquified natural gas so here is a summary of a trade I made today.



TheMoneyMadam

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In a down market look for covered calls GLNG

GLNG (Photo credit: Wikipedia)

Often times when the market is down volatility is up.  Indeed the measure of volatility, the VIX, is up a touch today at about 12.38.   Don't read too much into that as anything under 16 is still considered to reflect low volatility.

The trade today for high risk income investors is Golar LNG limited, symbol GLNG.   I have written about this stock before.   GLNG is not a Dividend Machine because the stock's earnings are all over the place.   It has paid consistent and increasing dividends since 2010.

When the market is down options traders figure they can get into a stock cheap.   This is not an investment strategy it is a trading strategy.   We income investors try to use their trading to our advantage and sell covered (I emphasize) covered calls on stocks that pay a dividend.  GLNG is one of these stocks.

I play this stock with covered calls; today they are quite nice.   Below is the call I sold today on some of my GLNG.    Please proceed with caution.























TheMoneyMadam

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Two high risk income stocks in the LNG space. GLNG and TGP

Two high risk income stocks in the LNG space.

As you know when I pick a stock for income I like Dividend Machines.   I use only four criteria to pick those stocks.   Today, I will deviate from that sage advice to take a look at liquefied natural gas shippers.

Golar LNG, (symbol GLNG) and Teekay LNG Partners, (symbol TGP)

This post compares two potential stocks in the LNG shipper space.   Each produces nice dividends but they are very different.  Neither stock is a dividend machine so please realize these are less than safe bets.

GLNG has operational advantages in this space. GLNG has a newer fleet; it has excess capacity so that it can respond to changing demand easily; it has a unique platform for processing gas and it has very little debt.

Dividend History

GLNG’s dividend history goes back to 2007.    During the financial crisis of 2008 & 2009 they did not pay the dividend.   Listed below are the last four years of dividends pay by GLNG.

Currently in 2014, the first quarterly dividend paid was $.45.   That is annualized to $1.80 per share per year.   Earnings are $1.72 per share per year.    Current yield at $39.10 is 4.54%.   Debt to equity (D/E) ratio is a mere .3697.

Compare GLNG with Teekay Partners (TGP).    TGP paid their first quarter dividend of $.675 in 2014.   That is an annual dividend of $2.76.    At today’s price of $41.168 the yield is 6.7%.   TGP’s dividend history since 2010 is presented in the table below.

Right now you might want to jump on TGP but read on.   TGP has high debt; the D/E ratio for this stock is 13568.76.  

Covered Call Potential

Covered calls are not available on TGP today but GLNG has a very nice call I sold today.   The call is a June $45 for a premium of $1.72.    The Call analysis is presented in the table below.

Two stocks playing on the LNG industry for your consideration. Both are high risk and only one of them is in my portfolio.

Consider GLNG for a high risk income play.

TheMoneyMadam

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