Updated 3/6/25
Cheniere Energy Partners, L.P. (CQP) is a major player in the liquefied natural gas (LNG) sector, operating the massive Sabine Pass terminal in Louisiana. This facility is one of the largest LNG export terminals in the United States, making CQP a key part of the global energy trade.
Unlike traditional corporations, CQP is structured as a master limited partnership (MLP), meaning it’s designed to pass most of its income back to investors in the form of dividends. That structure makes it particularly appealing to income-focused investors looking for steady cash flow.
However, the big question is whether its dividend is sustainable over the long term. Let’s dive into the key factors that matter most to dividend investors.
Key Dividend Metrics
🔹 Forward Dividend Yield: 5.27% – A strong payout, particularly for an energy infrastructure stock.
🔹 Trailing Dividend Yield: 5.12% – The yield has remained relatively stable over time.
🔹 5-Year Average Dividend Yield: 7.03% – Historically, CQP has offered an even higher yield, signaling past income potential.
🔹 Payout Ratio: 81.53% – A high percentage of earnings is being paid out, which is common for MLPs but something to watch.
🔹 Ex-Dividend Date: February 10, 2025 – Investors need to hold shares before this date to receive the next payout.
🔹 Dividend Payment Date: February 14, 2025 – This is when investors can expect their next distribution.
Dividend Overview
CQP’s dividend is one of its biggest attractions. A 5.27% yield is well above the broader market average and makes it a compelling choice for income investors. However, the payout ratio of over 80% raises some concerns about long-term sustainability.
Master limited partnerships like CQP typically distribute most of their cash flow rather than reinvesting heavily in growth. That structure works well as long as revenue remains steady, which has mostly been the case due to long-term LNG contracts.
One potential red flag is the company’s recent earnings decline. Over the past year, earnings per share dropped by 31.2%, which could make it harder to maintain or grow the dividend unless profitability rebounds.
Dividend Growth and Safety
CQP has been a strong dividend payer, but its growth track record is mixed. Unlike some dividend stocks that increase payouts regularly, CQP’s distributions have been more stable than growth-oriented.
How Safe is the Dividend?
Two key factors determine whether the dividend remains secure:
- Payout Ratio – At 81.53%, CQP is distributing a large portion of its earnings. While this is normal for MLPs, it leaves little room for growth if earnings weaken.
- Free Cash Flow – The company generated $2.15 billion in levered free cash flow last year, which supports its ability to pay dividends for now.
For investors looking for steady income rather than rapid dividend increases, CQP’s payout looks relatively stable. However, if earnings continue to decline, maintaining the current dividend could become more challenging.
Chart Analysis
Price Trend and Moving Averages
The price of CQP has been on a strong upward trajectory since late last year, pushing well above both the 50-day and 200-day moving averages. The 50-day moving average (orange line) has been trending higher for several months, reflecting bullish momentum, while the 200-day moving average (blue line) is also starting to curve upward. This suggests that the longer-term trend has turned positive after a period of sideways consolidation.
Currently, the stock appears to be experiencing a pullback after a strong rally, dipping below recent highs. The price remains well above the 50-day moving average, which often acts as a dynamic support level in an uptrend. However, a further drop could test the strength of this moving average as support.
Volume and Market Participation
Volume has picked up significantly during the rally, particularly in early February when the stock surged to new highs. This increase in volume indicates strong participation from buyers, which is a healthy sign of an uptrend. However, in recent sessions, volume has started to decline as the price pulls back. This suggests that enthusiasm may be cooling off, at least temporarily.
If selling volume increases significantly, it could indicate that more traders are locking in profits, which might lead to further downside pressure. On the other hand, a resurgence of buying volume near support levels could signal a continuation of the trend higher.
Relative Strength Index (RSI)
The RSI is currently sitting around 39, which is on the lower end of the neutral zone. Just a few weeks ago, RSI was significantly higher, indicating overbought conditions, but the recent pullback has helped reset momentum. A reading below 30 would indicate an oversold condition, which could signal a potential bounce.
Right now, the RSI suggests that the stock is in a cooling-off phase rather than an outright reversal. If the RSI continues to drop, it could signal that further downside movement is ahead, but if it stabilizes or turns higher, it could indicate that the pullback is just a temporary dip within a larger uptrend.
Recent Candlestick Action
The last few candles show a sharp pullback from recent highs, with the latest candle closing lower after a weak attempt to push higher. The presence of longer upper wicks in recent sessions suggests that sellers have been stepping in at higher prices, creating some resistance.
While the trend remains positive, the last few candles indicate that the stock may be in a short-term correction phase. If buyers step back in near a key support level, such as the 50-day moving average, the stock could find a base and resume its uptrend. However, if the pullback continues with increasing selling pressure, a deeper retracement could be in play.
Analyst Ratings
🔼 Recent Upgrades
In the past several months, Cheniere Energy Partners (CQP) has gained some positive attention from analysts. One notable upgrade came when an investment firm adjusted its rating from neutral to buy, setting a new price target of $57. This shift was largely based on the company’s strong operational performance and the continued demand for liquefied natural gas (LNG). Analysts highlighted CQP’s long-term contracts as a major strength, providing predictable revenue even in a fluctuating energy market. They also pointed to improving financial metrics, suggesting the stock had room for further upside.
🔽 Recent Downgrades
Not all analysts are in agreement, as CQP has also seen some downgrades. A different firm revised its rating from hold to sell, lowering its price target to $53. The reasoning behind this downgrade stemmed from concerns about valuation, with the stock price having surged in recent months. Some analysts were also cautious about potential challenges in the LNG market, such as changing global demand and pricing pressures, which could weigh on the company’s earnings. Additionally, rising interest rates could make CQP’s high debt levels more of a concern for investors looking at long-term sustainability.
🎯 Consensus Price Target
As of early March 2025, the average price target from analysts sits at $55.50. This reflects a balanced perspective, considering both the company’s stable cash flow from long-term contracts and the uncertainties in the broader energy market. Analysts continue to watch global LNG trends and the company’s financial position as key factors that could determine whether the stock moves higher or faces further resistance.
Earning Report Summary
Cheniere Energy Partners (CQP) just released its latest earnings, and while the numbers show the company is still in a strong position, there were some noticeable shifts compared to last year.
Fourth Quarter Performance
Revenue came in at around $2.5 billion for the fourth quarter, which is down about 8% from the same time last year. The main reason for this drop was lower prices in the liquefied natural gas (LNG) market. Even though demand for LNG remains solid, pricing fluctuations have put some pressure on revenue.
Net income for the quarter was reported at $623 million, which is also lower than the $906 million reported in the fourth quarter of 2023. This decline was largely due to weaker LNG pricing, which cut into overall profitability.
On the earnings before interest, taxes, depreciation, and amortization (EBITDA) side, the company posted $890 million in adjusted EBITDA for the quarter. That’s a step down from the $1.05 billion reported in Q4 2023, which isn’t surprising given the revenue dip.
Full Year Results
For the entire year, CQP reported about $8.7 billion in total revenue. That’s a roughly 10% decline from 2023, again due to lower LNG prices. The company’s net income for the year landed at $2.5 billion, a noticeable drop from the $4.2 billion it brought in the previous year.
On the bright side, adjusted EBITDA for the year was $3.6 billion, which is only slightly lower than the $3.65 billion reported in 2023. This suggests that despite lower revenues, the company has been able to manage costs effectively and keep operations running efficiently.
Cash Distributions
For income-focused investors, the dividend remains a key highlight. The company announced a cash distribution of $0.820 per common unit for the fourth quarter of 2024. This payout includes a base amount of $0.775 plus a variable portion, which means investors are still seeing a steady stream of income from their holdings.
Overall, while some numbers have come down from last year, CQP continues to generate solid earnings and maintain its dividend payouts. The LNG market can be unpredictable, but the company’s long-term contracts help provide some stability even when prices fluctuate.
Financial Health and Stability
CQP operates in a capital-intensive industry, which means it carries a significant amount of debt. Here’s a quick snapshot of its financial position:
- Total Debt: $15.27 billion – A heavy debt load, but not uncommon for large energy infrastructure companies.
- Total Cash: $270 million – A relatively small cash reserve, but steady cash flow helps offset this concern.
- Current Ratio: 0.77 – This indicates potential short-term liquidity challenges if unexpected financial pressures arise.
Debt is one of the biggest risks for companies in this sector, particularly if interest rates remain high. If borrowing costs increase, it could cut into profits and put pressure on dividend payments.
However, CQP remains profitable, with a return on assets of 11.53%, suggesting the company is managing its resources efficiently despite its debt burden.
Valuation and Stock Performance
At 14.51 times trailing earnings, CQP is trading at a reasonable valuation compared to the broader energy sector. That being said, its valuation has been lower in the past, meaning there could be some downside risk if earnings don’t improve.
Stock Performance Highlights
- 52-Week Range: $45.51 – $68.30 – The stock is currently trading near the higher end of this range.
- 50-Day Moving Average: $60.46 – The stock has been holding above this short-term support level.
- 200-Day Moving Average: $52.95 – Long-term momentum remains positive.
- Beta (5-Year Monthly): 0.68 – A relatively low volatility stock, which is a plus for conservative investors.
CQP has performed well over the past year, but revenue has declined by 8.4% on a year-over-year basis. That’s something investors should watch closely, as continued revenue weakness could eventually weigh on the stock price.
Risks and Considerations
Every investment comes with risks, and CQP is no exception. Here are some key factors to keep in mind:
📉 Earnings Decline – Quarterly earnings fell by 31.2%, which raises concerns about future profitability.
💰 High Payout Ratio – At over 80%, there isn’t much room for dividend growth unless earnings improve.
🛢️ Energy Market Uncertainty – While LNG demand is strong, commodity markets can be unpredictable, which could impact cash flow.
🏦 Debt Burden – The company carries over $15 billion in debt, which could become a problem if interest rates rise further.
⚠️ Limited Dividend Growth – Investors seeking steadily increasing dividends may want to consider alternatives, as CQP has prioritized stability over growth.
Final Thoughts
Cheniere Energy Partners, L.P. has built a strong reputation as a reliable dividend payer, with a generous 5.27% yield backed by stable cash flow. Its long-term LNG contracts provide some stability, making it a compelling choice for income-focused investors.
However, there are a few factors to watch, including its high payout ratio, declining earnings, and significant debt load. While the dividend appears safe for now, future growth could be limited unless earnings improve.
For investors who value steady income over dividend growth, CQP remains an attractive option. However, those looking for consistent increases in payouts may want to explore other opportunities.
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