Energy Transfer Continues to Raise Dividends
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Source: Fool
- Dividend Increase: Energy Transfer has raised its quarterly distribution to $0.335 per unit, annualizing to $1.34, which is over a 3% increase from last year, reflecting the company's stable cash flow and strong financial profile.
- Financial Flexibility: The company has maintained an average payout of over 50% of its annual cash flows over the past three years, allowing it to retain billions for expansion projects while keeping its leverage ratio within the 4.0-4.5 times target range, ensuring financial flexibility.
- Expansion Plans: Energy Transfer plans to invest $5 billion to $5.5 billion in growth capital projects in 2023, up from $4.6 billion last year, with key projects including the $2.7 billion Hugh Brinson Pipeline and the $5.6 billion Transwestern Pipeline Expansion, expected to provide significant cash flow growth in the coming years.
- Ideal Passive Income Investment: With its ongoing dividend growth, Energy Transfer is positioned as an ideal investment for those seeking passive income, boasting a dividend yield of 7.13%, significantly higher than the S&P 500's 1.1%.
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Analyst Views on ET
Wall Street analysts forecast ET stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for ET is 20.65 USD with a low forecast of 17.00 USD and a high forecast of 23.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
11 Analyst Rating
7 Buy
4 Hold
0 Sell
Moderate Buy
Current: 18.530
Low
17.00
Averages
20.65
High
23.00
Current: 18.530
Low
17.00
Averages
20.65
High
23.00
About ET
Energy Transfer LP owns and operates a diversified portfolios of energy assets in the United States, with more than 140,000 miles of pipeline and associated energy infrastructure. The Company’s strategic network spans 44 states with assets in all of the major United States production basins. Its core operations include complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (NGL) and refined product transportation and terminalling assets; and NGL fractionation. The Company’s segments include intrastate transportation and storage, interstate transportation and storage, midstream, NGL and refined products transportation and services, crude oil transportation and services, investment in Sunoco LP, investment in USA Compression Partners, LP (USAC), and all other. It also owns Lake Charles LNG Company, LLC, its wholly owned subsidiary, which owns an LNG import terminal and regasification facility.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Energy Transfer's Growth Outlook for Dividend Investors
- Dividend History Challenge: Energy Transfer's 2020 decision to halve its distribution has led to diminished trust among conservative dividend investors, especially as competitors like Enterprise Products Partners and Enbridge continued to raise their distributions, highlighting market discrepancies.
- Management Change: The CEO involved in the Williams acquisition debacle is no longer in charge, and the new management has committed to a distribution growth rate of 3% to 5% annually, indicating a positive shift in the company's dividend policy.
- Attractive Yield: With a current distribution yield of 7.4%, projections suggest that a 3% growth could elevate the per-unit distribution to $1.79 in ten years, while a 5% growth could reach $1.82, showcasing the potential for long-term investment returns.
- Steady Growth Outlook: Even if the current unit price remains unchanged, future distribution growth could yield around 10% for investors, indicating a positive cycle between distribution increases and stock price growth, making it appealing for income-focused investors.
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Energy Transfer Continues to Raise Dividends
- Dividend Increase: Energy Transfer has raised its quarterly distribution to $0.335 per unit, annualizing to $1.34, which is over a 3% increase from last year, reflecting the company's stable cash flow and strong financial profile.
- Financial Flexibility: The company has maintained an average payout of over 50% of its annual cash flows over the past three years, allowing it to retain billions for expansion projects while keeping its leverage ratio within the 4.0-4.5 times target range, ensuring financial flexibility.
- Expansion Plans: Energy Transfer plans to invest $5 billion to $5.5 billion in growth capital projects in 2023, up from $4.6 billion last year, with key projects including the $2.7 billion Hugh Brinson Pipeline and the $5.6 billion Transwestern Pipeline Expansion, expected to provide significant cash flow growth in the coming years.
- Ideal Passive Income Investment: With its ongoing dividend growth, Energy Transfer is positioned as an ideal investment for those seeking passive income, boasting a dividend yield of 7.13%, significantly higher than the S&P 500's 1.1%.
Continue Reading