Energy Transfer's Growing Passive Income Stream
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy ET?
Source: Fool
- High Distribution Yield: Energy Transfer currently boasts a distribution yield nearing 7.5%, significantly higher than the S&P 500's dividend yield of approximately 1.1%, making it an ideal source of passive income; despite the higher risk profile typically associated with high-yield investments, the company is in its strongest financial position ever.
- Stable Cash Flows: Over the past three years, Energy Transfer has distributed about 50% of its annual cash flows to investors, with around 90% derived from stable fee-based sources, allowing the company to retain billions for operational expansion while maintaining a strong balance sheet, with its leverage ratio currently within the target range of 4.0-4.5 times, providing additional financial flexibility.
- Consistent Distribution Growth: The company has recently raised its cash distribution again, achieving over 3% distribution growth in the past year, aligning with its long-term target of 3% to 5% annual growth, and is expected to see earnings rise by 7% to 10% this year due to the ramp-up of several expansion projects.
- Future Investment Plans: Energy Transfer plans to invest $5 billion to $5.5 billion in organic expansion projects this year as part of a multi-year capital spending program, including the $5.6 billion Transwestern Pipeline expansion project scheduled for completion in Q4 2029, with strong gas demand creating incremental investment opportunities to expand its gas network.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy ET?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on ET
Wall Street analysts forecast ET stock price to rise
11 Analyst Rating
7 Buy
4 Hold
0 Sell
Moderate Buy
Current: 18.260
Low
17.00
Averages
20.65
High
23.00
Current: 18.260
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 Set to Release Q4 Earnings Report
- Earnings Outlook: Energy Transfer is set to report its Q4 earnings on February 17, with little expectation for stock price volatility, as it has not moved more than 5% post-earnings in the last three years.
- Guidance Stability: The company issued its 2026 adjusted EBITDA guidance in early January, projecting between $17.3 billion and $17.7 billion, indicating a stable growth rate of 9% to 10%.
- Capital Expenditure Plans: Energy Transfer plans to allocate $5 billion to $5.5 billion for growth projects in 2026, an increase from the $4.6 billion budgeted for 2025, which is expected to generate approximately $900 million in incremental EBITDA.
- Attractive Dividend Stock: Despite the stable earnings outlook, Energy Transfer remains a high-yield dividend stock in the midstream energy sector, boasting a 7.4% yield and a solid balance sheet, making it a compelling long-term investment.
See More
Energy Transfer's Strong Growth Prospects and High-Yielding Distribution
- High-Yield Distribution: Energy Transfer currently boasts a distribution yield of approximately 7.5%, significantly higher than the S&P 500's yield of around 1.1%, making it an attractive option for passive income investors.
- Financial Stability: The company has distributed about 50% of its annual cash flows to investors over the past three years, with 90% derived from stable fee-based sources, ensuring a robust financial foundation and capacity for expansion.
- Sustained Growth Target: Energy Transfer aims to increase its distribution by 3% to 5% annually, having achieved over 3% growth in the past year, indicating strong potential for future distribution increases.
- Expansion Investment Plans: The company plans to invest $5 billion to $5.5 billion in organic expansion projects this year, with expected earnings growth of 7% to 10% due to the completion of several expansion initiatives, further enhancing its competitive position in the market.
See More
Energy Transfer's Growing Passive Income Stream
- High Distribution Yield: Energy Transfer currently boasts a distribution yield nearing 7.5%, significantly higher than the S&P 500's dividend yield of approximately 1.1%, making it an ideal source of passive income; despite the higher risk profile typically associated with high-yield investments, the company is in its strongest financial position ever.
- Stable Cash Flows: Over the past three years, Energy Transfer has distributed about 50% of its annual cash flows to investors, with around 90% derived from stable fee-based sources, allowing the company to retain billions for operational expansion while maintaining a strong balance sheet, with its leverage ratio currently within the target range of 4.0-4.5 times, providing additional financial flexibility.
- Consistent Distribution Growth: The company has recently raised its cash distribution again, achieving over 3% distribution growth in the past year, aligning with its long-term target of 3% to 5% annual growth, and is expected to see earnings rise by 7% to 10% this year due to the ramp-up of several expansion projects.
- Future Investment Plans: Energy Transfer plans to invest $5 billion to $5.5 billion in organic expansion projects this year as part of a multi-year capital spending program, including the $5.6 billion Transwestern Pipeline expansion project scheduled for completion in Q4 2029, with strong gas demand creating incremental investment opportunities to expand its gas network.
See More
Fed Rate Cuts Drive Investors Back to Dividend Stocks
- Investor Shift to Dividend Stocks: Following six consecutive Fed rate cuts, investors are refocusing on dividend stocks, particularly Energy Transfer and Verizon, which are expected to benefit from future economic growth.
- Energy Transfer's Resilient Model: Operating over 140,000 miles of pipeline in the U.S. with a market cap of $63 billion, Energy Transfer boasts a 7.26% dividend yield and a business model that effectively withstands commodity price volatility, ensuring stable profits.
- Verizon's Growth Strategy: Serving 146.7 million wireless customers, Verizon has faced competitive pressures but has added over 2.2 million fiber subscribers through its acquisition of Frontier Communications, with adjusted EPS expected to rise 4% in 2026 and 7% in 2027.
- Attractive Valuations: With a forward yield of 7.3% for Energy Transfer and a 5.7% forward dividend yield for Verizon, both companies are valued below industry averages, indicating strong investment potential.
See More
Energy Transfer Set to Announce Q4 Earnings Results
- Earnings Announcement: Energy Transfer is set to announce its Q4 earnings on February 17 before market open, with previous quarter results falling short of expectations as adjusted EBITDA and cash flow slightly declined year-over-year, yet the company achieved record volumes in natural gas liquids transportation, terminal volumes, and exports.
- Bullish Market Analysis: Analyst Steven Fiorillo anticipates a positive outlook for the company, emphasizing its diversified infrastructure assets and long-term data center contracts, suggesting that there is much to look forward to in the upcoming earnings report.
- Rating Downgrade Impact: KM Capital downgraded the stock to Hold, citing stretched valuation and operating leverage uncertainty, but still expects robust Q4 revenue driven by organic growth and M&A, indicating resilience in the company's market position despite challenges.
- Earnings Expectations and Market Reaction: The consensus EPS estimate stands at $0.30 with a revenue estimate of $24.04 billion, reflecting a 23.0% year-over-year increase, although the past three months have seen no upward revisions and two downward revisions for EPS, indicating cautious sentiment regarding the company's future performance.
See More
Analysis of Energy Transfer's Future Growth Potential
- Strong Stock Performance: Energy Transfer's stock has rallied 42% over the past three years, and when including reinvested distributions, the total return reaches 78%, indicating its robust market performance and attractiveness to investors.
- Resilient Business Model: Operating over 140,000 miles of pipelines, the company provides transportation and storage services for natural gas, LNG, and crude oil, with a tolling model that allows it to maintain stable profits despite commodity price volatility, although it faces challenges from tariffs and high interest rates.
- Robust Growth Drivers: Energy Transfer has added over 50,000 miles of pipelines through acquisitions in recent years and plans further acquisitions, while the expansion of its core Permian Basin operations and the completion of the Lake Charles LNG project in Louisiana are expected to drive organic growth.
- Optimistic Profitability Outlook: Analysts project that from 2025 to 2027, the company's adjusted EBITDA and earnings per public unit (EPU) will grow at compound annual growth rates of 6.5% and 11.7%, respectively, indicating strong future profitability and attracting more investors.
See More
Energy Transfer Set to Release Q4 Earnings Report
- Earnings Outlook: Energy Transfer is set to report its Q4 earnings on February 17, with little expectation for stock price volatility, as it has not moved more than 5% post-earnings in the last three years.
- Guidance Stability: The company issued its 2026 adjusted EBITDA guidance in early January, projecting between $17.3 billion and $17.7 billion, indicating a stable growth rate of 9% to 10%.
- Capital Expenditure Plans: Energy Transfer plans to allocate $5 billion to $5.5 billion for growth projects in 2026, an increase from the $4.6 billion budgeted for 2025, which is expected to generate approximately $900 million in incremental EBITDA.
- Attractive Dividend Stock: Despite the stable earnings outlook, Energy Transfer remains a high-yield dividend stock in the midstream energy sector, boasting a 7.4% yield and a solid balance sheet, making it a compelling long-term investment.
See More
Energy Transfer's Strong Growth Prospects and High-Yielding Distribution
- High-Yield Distribution: Energy Transfer currently boasts a distribution yield of approximately 7.5%, significantly higher than the S&P 500's yield of around 1.1%, making it an attractive option for passive income investors.
- Financial Stability: The company has distributed about 50% of its annual cash flows to investors over the past three years, with 90% derived from stable fee-based sources, ensuring a robust financial foundation and capacity for expansion.
- Sustained Growth Target: Energy Transfer aims to increase its distribution by 3% to 5% annually, having achieved over 3% growth in the past year, indicating strong potential for future distribution increases.
- Expansion Investment Plans: The company plans to invest $5 billion to $5.5 billion in organic expansion projects this year, with expected earnings growth of 7% to 10% due to the completion of several expansion initiatives, further enhancing its competitive position in the market.
See More
Energy Transfer's Growing Passive Income Stream
- High Distribution Yield: Energy Transfer currently boasts a distribution yield nearing 7.5%, significantly higher than the S&P 500's dividend yield of approximately 1.1%, making it an ideal source of passive income; despite the higher risk profile typically associated with high-yield investments, the company is in its strongest financial position ever.
- Stable Cash Flows: Over the past three years, Energy Transfer has distributed about 50% of its annual cash flows to investors, with around 90% derived from stable fee-based sources, allowing the company to retain billions for operational expansion while maintaining a strong balance sheet, with its leverage ratio currently within the target range of 4.0-4.5 times, providing additional financial flexibility.
- Consistent Distribution Growth: The company has recently raised its cash distribution again, achieving over 3% distribution growth in the past year, aligning with its long-term target of 3% to 5% annual growth, and is expected to see earnings rise by 7% to 10% this year due to the ramp-up of several expansion projects.
- Future Investment Plans: Energy Transfer plans to invest $5 billion to $5.5 billion in organic expansion projects this year as part of a multi-year capital spending program, including the $5.6 billion Transwestern Pipeline expansion project scheduled for completion in Q4 2029, with strong gas demand creating incremental investment opportunities to expand its gas network.
See More
Fed Rate Cuts Drive Investors Back to Dividend Stocks
- Investor Shift to Dividend Stocks: Following six consecutive Fed rate cuts, investors are refocusing on dividend stocks, particularly Energy Transfer and Verizon, which are expected to benefit from future economic growth.
- Energy Transfer's Resilient Model: Operating over 140,000 miles of pipeline in the U.S. with a market cap of $63 billion, Energy Transfer boasts a 7.26% dividend yield and a business model that effectively withstands commodity price volatility, ensuring stable profits.
- Verizon's Growth Strategy: Serving 146.7 million wireless customers, Verizon has faced competitive pressures but has added over 2.2 million fiber subscribers through its acquisition of Frontier Communications, with adjusted EPS expected to rise 4% in 2026 and 7% in 2027.
- Attractive Valuations: With a forward yield of 7.3% for Energy Transfer and a 5.7% forward dividend yield for Verizon, both companies are valued below industry averages, indicating strong investment potential.
See More
Energy Transfer Set to Announce Q4 Earnings Results
- Earnings Announcement: Energy Transfer is set to announce its Q4 earnings on February 17 before market open, with previous quarter results falling short of expectations as adjusted EBITDA and cash flow slightly declined year-over-year, yet the company achieved record volumes in natural gas liquids transportation, terminal volumes, and exports.
- Bullish Market Analysis: Analyst Steven Fiorillo anticipates a positive outlook for the company, emphasizing its diversified infrastructure assets and long-term data center contracts, suggesting that there is much to look forward to in the upcoming earnings report.
- Rating Downgrade Impact: KM Capital downgraded the stock to Hold, citing stretched valuation and operating leverage uncertainty, but still expects robust Q4 revenue driven by organic growth and M&A, indicating resilience in the company's market position despite challenges.
- Earnings Expectations and Market Reaction: The consensus EPS estimate stands at $0.30 with a revenue estimate of $24.04 billion, reflecting a 23.0% year-over-year increase, although the past three months have seen no upward revisions and two downward revisions for EPS, indicating cautious sentiment regarding the company's future performance.
See More
Analysis of Energy Transfer's Future Growth Potential
- Strong Stock Performance: Energy Transfer's stock has rallied 42% over the past three years, and when including reinvested distributions, the total return reaches 78%, indicating its robust market performance and attractiveness to investors.
- Resilient Business Model: Operating over 140,000 miles of pipelines, the company provides transportation and storage services for natural gas, LNG, and crude oil, with a tolling model that allows it to maintain stable profits despite commodity price volatility, although it faces challenges from tariffs and high interest rates.
- Robust Growth Drivers: Energy Transfer has added over 50,000 miles of pipelines through acquisitions in recent years and plans further acquisitions, while the expansion of its core Permian Basin operations and the completion of the Lake Charles LNG project in Louisiana are expected to drive organic growth.
- Optimistic Profitability Outlook: Analysts project that from 2025 to 2027, the company's adjusted EBITDA and earnings per public unit (EPU) will grow at compound annual growth rates of 6.5% and 11.7%, respectively, indicating strong future profitability and attracting more investors.
See More
