KNOT Offshore Partners Raises Quarterly Dividend 33.3% to $0.10

KNOT Offshore Partners LP raised its quarterly cash distribution 33.3% to $0.10 per common unit from $0.075. The units traded ex-distribution on October 26, 2026, and the payment is due November 12, 2026. The new rate represents an annual dividend of $0.40.

Why the dividend changed

The board tied the increase to two sources of prospective cash-flow growth: vessel acquisitions from its sponsor, known as dropdowns, and improved rates as existing vessels are rechartered. The partnership said those factors support gradual distribution increases, making the latest move part of a planned restoration rather than an isolated adjustment. KNOT’s distribution announcement repeated that rationale.

The latest reported quarter provided some support for that position. Second-quarter revenue was $96.8 million, operating income was $15.6 million and net income was $3.4 million. Available liquidity was $143.3 million, while scheduled fleet utilization was 96.8%, or 92.4% after including a planned drydocking. Revenue increased from the preceding quarter as the partnership recorded more loss-of-hire insurance recoveries and fewer off-hire days. The quarterly earnings release also showed that net income remained below the prior-year period, partly because depreciation increased.

Recent fleet and financing transactions add context. KNOT acquired the Hedda Knutsen, a tanker chartered to Petrobras through November 2034, at an initial cost of about $24.4 million after associated debt and fees. It also completed a $225 million secured refinancing covering five vessels, replacing loans that had been due in September 2026. These transactions extended charter visibility and addressed a near-term maturity, but the acquired vessel also brought additional debt onto the balance sheet. The acquisition and refinancing announcement provides the transaction terms.

Dividend track record

The recent payment sequence shows a stepwise restoration. KNOP paid $0.026 for the January 26, 2026, ex-dividend date, followed by $0.05 on April 27, $0.075 on July 27 and $0.10 on October 26. The progression is substantial, but it starts from the sharply reduced base established after the previous cut.

Annual totals show the scale of that reset. Payments totaled $2.08 per share in each of 2020, 2021 and 2022. The annual total was cut 95.0% to $0.10 in 2023, then remained unchanged at $0.10 in both 2024 and 2025. The current increase therefore restores only part of the income lost in the 2023 reduction.

KNOP has 0 consecutive years of dividend growth, and its five-year record remains a 45.1% annual decline. The increases during 2026 improve the near-term direction, but they do not erase the earlier cut or establish an annual growth streak.

Is the dividend covered?

The earnings payout ratio is 93%. That means the distribution absorbs most of the earnings supporting it, leaving a limited cushion if operating results weaken, vessels spend more time off hire or financing costs rise.

SmarterDividends rates the dividend C, with a safety score of 58. That falls in the borderline (50-65) range, indicating that the current payment is supported but does not have the margin associated with a stronger safety grade. KNOT also says it distributes available cash and expects to use external financing for acquisitions and expansion spending. That structure makes debt service, refinancing and vessel capital requirements important to distribution coverage.

Yield and valuation

The annual dividend of $0.40 produces a 4.00% forward yield at a share price of $9.99. That is slightly above the Energy sector median forward yield of 3.96%, so the distribution increase has moved KNOP just ahead of the sector benchmark rather than creating an unusually wide yield premium.

SmarterDividends estimates fair value at $20.43 and classifies the units as undervalued, corresponding to 99% upside from the stated market price. The estimate is a valuation measure, not evidence of additional dividend coverage. KNOP’s market value is $345 million, while its capital-intensive fleet and debt obligations remain central to both valuation and payout capacity.

What to watch

The immediate event is the November 12, 2026, payment; the October 26, 2026, ex-dividend date has passed. The next quarterly report will provide the first fuller view of how the Hedda Knutsen acquisition, recent rechartering and fleet availability are affecting earnings and liquidity after the increase.

Financing remains another concrete checkpoint. Management’s latest results identified a Live Knutsen secured facility due in October 2026 and said it expected to refinance it. The status and terms of that refinancing, along with operating performance under the newer Petrobras, Eni and Transpetro charters, will help show how much cash remains after debt service and fleet spending.