Worldwide demand for liquefied natural gas (LNG) has doubled since 2000, and for investors looking to enter this burgeoning market, LNG shipping stocks are a great play.
The United States is positioned perfectly to ride the LNG wave.
According to BP's Energy Outlook 2035, which was published in January, the United States will double its current production of shale gas by 2035. The report also indicated that the United States will become the world's largest natural gas producer in that time.
Not surprisingly, companies are champing at the bit to open LNG export facilities in the United States. Currently, more than 20 energy companies are awaiting government approval on the construction of LNG exporting facilities.
Once all that liquefied natural gas is ready to be exported, someone will need to ship it.
These companies are positioned perfectly to do just that...
The Top LNG Shipping Stocks to Buy Now
Golar LNG (Nasdaq: GLNG) has been shipping LNG for over 30 years and has a fleet of 13 vessels. Most importantly, GLNG is expecting to add 11 new vessels to its fleet in 2014.
Golar does more than just shipping. It was the developer of the world's first floating storage and regasification unit, which receives oil or gas, processes it, and stores it so it can be unloaded onto a tanker or transferred via a pipeline. Golar also owns 25% of the Douglas Channel LNG project in British Columbia.
GLNG stock's long-term potential amidst an LNG boom is one of the strongest in the LNG shipping industry. Investors who have held GLNG stock for a few years have been rewarded with a 129% gain since January 2011. The stock is down about 4% so far in 2014, as broader markets have slumped, which gives investors a cheaper entry point.
GasLog Ltd. (NYSE: GLOG) currently operates eight shipping vessels and has seven additional ships being constructed for delivery between 2014 and 2016. Through its subsidiaries, GasLog manages an additional 11 ships.
The recent market sell-off in 2014 has not affected GLOG stock, as it's up nearly 24% year to date. In the past 12 months, GLOG has performed among the top LNG stocks, with a 67% gain. GasLog is a relatively small company with a market cap of just $1.3 billion. It pays its shareholders a quarterly dividend of $0.12, or 2.3%.
Teekay LNG Partners (NYSE: TGP) is the third-largest independent owner of LNG vessels in the world with a total of 29. The majority of Teekay's contracts are long term, between 10 and 25 years.
As Money Morning wrote earlier this year, the expansion of the Panama Canal is an excellent opportunity for Teekay. Larger vessels will be permitted in the Panama Canal, and TGP has recently contracted with Daewoo Shipbuilding & Marine Engineering to build four new larger vessels that will transport even more LNG through the canal.
TGP stock has bounced around a bit in the last year, but has posted an overall gain of 1.4% in the past 12 months. Investors who have held TGP stock for the past five years have seen profits of 120%. TGP offers shareholders a high dividend yield of 6.7% as well.
DHT Holdings Inc. (NYSE: DHT) has a fleet consisting of eight double-hull crude tankers. Four of its tankers are classified as VLCCs, meaning they range in size from 200,000 to 320,000 deadweight tons. At the end of January, the company announced its plans to add three VLCCs to its fleet at a price of $97.3 million each.
DHT has had an impressive 2014, up nearly 13% year to date. DHT doesn't quite qualify as a penny stock, but trading at just $7.72, it is affordable. The company also has a tiny market cap of just $120 million. In the past 12 months the stock has soared 81%.
Chevron Corp. (NYSE: CVX) is one of the most recognizable names in the energy industry. It's also involved with the processing, transportation and regasification of LNG. According to the company, it operated approximately 2,100 deep-sea tanker voyages during 2012 alone. Those voyages included crude oil, refined products, liquefied petroleum gas, and liquefied natural gas.
The recent sell-off has affected CVX stock, but CVX had posted a gain of 17% for the full year 2013. The company also rewards shareholders with a $1.00 quarterly dividend, good for a 3.5% yield.
Which LNG shipping stocks do you think are poised to capitalize off this booming market? Let us know @moneymorning using #LNGstocks.