Why I Can't Stop Buying Energy Transfer These Days

Published: Saturday, February 14, 2026 at 12:27 pm

Energy Transfer: A Pipeline Stock with a High Yield and Growth Potential

Energy Transfer (ET) is attracting investor attention due to its high distribution yield and growth prospects. The master limited partnership (MLP) is currently yielding approximately 7.5%, significantly higher than the S&P 500's dividend yield. This high yield makes it an attractive option for generating passive income.

The company's financial health is also a key factor. Energy Transfer is in its strongest financial position to date. It has been distributing about 50% of its annual cash flows to investors over the past three years, with a significant portion derived from stable fee-based sources. This allows the company to retain billions of dollars for expansion and maintain a strong balance sheet. Its leverage ratio is within its target range, providing financial flexibility.

Energy Transfer has a history of increasing its cash distribution. It has raised its payout each quarter for several years, with over 3% distribution growth in the past year. The company aims for 3% to 5% annual distribution growth. Earnings are projected to increase by 7% to 10% this year, driven by the completion of expansion projects.

The company is investing billions in organic expansion projects this year, as part of a multi-year capital spending program. These projects are expected to come online through the end of the decade. Energy Transfer is also pursuing additional expansion projects, particularly in its gas infrastructure platform, driven by strong gas demand.

The combination of high income and growth potential makes Energy Transfer an appealing investment. The company's ongoing distribution increases and expansion plans suggest the potential for strong total returns in the coming years.

BNN's Perspective:

Energy Transfer's high yield and growth prospects are certainly enticing. However, investors should be aware of the inherent risks associated with MLPs, including the potential for tax complexities. While the company's financial position appears strong, it's crucial to carefully consider the long-term implications of its expansion plans and the evolving energy landscape.

Keywords: Energy Transfer, ET, MLP, distribution yield, passive income, pipeline stock, dividend, financial health, expansion projects, gas infrastructure, investment, growth potential, high yield, leverage ratio

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