- Energy Transfer LP (ET) Is a Trending Stock: Facts to Know Before Betting on It
May 12, 2026
Energy Transfer LP (ET) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.
Shares of this energy-related services provider have returned +4% over the past month versus the Zacks S&P 500 composite's +8.8% change. The Zacks Oil and Gas - Production Pipeline - MLB industry, to which Energy Transfer LP belongs, has gained 1.8% over this period. Now the key question is: Where could the stock be headed in the near term?
While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.
Revisions to Earnings Estimates
Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.
We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Energy Transfer LP is expected to post earnings of $0.36 per share for the current quarter, representing a year-over-year change of +12.5%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.6%.
For the current fiscal year, the consensus earnings estimate of $1.47 points to a change of +21.5% from the prior year. Over the last 30 days, this estimate has changed -0.4%.
For the next fiscal year, the consensus earnings estimate of $1.56 indicates a change of +6.1% from what Energy Transfer LP is expected to report a year ago. Over the past month, the estimate has changed -1.6%.
With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Energy Transfer LP.
Story Continues
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS12-month consensus EPS estimate for ET
Revenue Growth Forecast
Even though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.
In the case of Energy Transfer LP, the consensus sales estimate of $29.23 billion for the current quarter points to a year-over-year change of +51.9%. The $116.89 billion and $119.52 billion estimates for the current and next fiscal years indicate changes of +36.7% and +2.2%, respectively.
Last Reported Results and Surprise History
Energy Transfer LP reported revenues of $27.77 billion in the last reported quarter, representing a year-over-year change of +32.1%. EPS of $0.35 for the same period compares with $0.36 a year ago.
Compared to the Zacks Consensus Estimate of $29.28 billion, the reported revenues represent a surprise of -5.17%. The EPS surprise was -7.89%.
Over the last four quarters, Energy Transfer LP surpassed consensus EPS estimates times. The company topped consensus revenue estimates times over this period.
Valuation
No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.
While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Energy Transfer LP is graded A on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
Bottom Line
The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Energy Transfer LP. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Energy Transfer LP (ET) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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- Energy Transfer LP (ET) Is a Trending Stock: Facts to Know Before Betting on It
May 12, 2026 · zacks.com
Energy Transfer LP (ET) has been one of the stocks most watched by Zacks.com users lately. So, it is worth exploring what lies ahead for the stock.
- Energy Transfer: Growth Tailwinds Are Surprisingly Underpriced
May 12, 2026 · seekingalpha.com
Energy Transfer (ET) has resolved its prior underperformance versus XLE peers, with upgraded EBITDA guidance and a constructive growth capital outlook. ET's Q1 results highlight broad-based volume expansion, notably 19% growth in NGL and refined product exports, supporting a stable, capacity-driven investment thesis. Management maintains its focus on achieving 3–5% annualized distribution growth, underpinned by structural demand from data centers and power distribution, with adjusted EBITDA expected to exceed $19.2B by FY28.
- Better Oil Stock: Occidental Petroleum vs. Energy Transfer
May 11, 2026
Occidental Petroleum(NYSE: OXY) and Energy Transfer(NYSE: ET) represent two different ways to profit from the growing demand for oil and natural gas. Occidental, better known as Oxy, is a leading upstream company with a much smaller midstream business. Energy Transfer, which operates as a master limited partnership (MLP), is a leading midstream company.
Oxy's stock has risen 34% year-to-date, while Energy Transfer's shares have risen 17%. Let's see why Oxy outperformed Energy Transfer -- and if it's still the better overall investment.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »Image source: Getty Images.
Why is Oxy outperforming Energy Transfer?
The spot price of WTI crude oil has risen more than 90% this year to about $110 per barrel. Most of that gain occurred after the outbreak of the Iran war in late February, which severely throttled oil and natural gas shipments through the Strait of Hormuz.
Upstream companies primarily focus on oil and natural gas extraction, so rising oil prices boost their revenues much faster than their expenses. Oxy's upstream business can keep generating massive profits as long as oil stays above its breakeven price of roughly $60 per barrel.
Midstream companies charge upstream and downstream companies "tolls" to transport those resources through their pipelines and infrastructure. That business model insulates them from volatile commodity prices, but they also see fewer benefits from soaring oil prices.
Since Oxy generates most of its revenue from its upstream business, higher oil prices drove its stock price higher. This January, it sold OxyChem, its downstream refining and chemical production business, which has more negative exposure to rising oil prices. As a top upstream player, Oxy attracted more attention than midstream and downstream companies.
Energy Transfer operates more than 140,000 miles of pipeline across 44 states. It transports natural gas, liquefied natural gas (LNG), natural gas liquids (NGLs), crude oil, and other refined products through its pipelines. It also helps export some natural gas products overseas.
Midstream companies indirectly benefit from higher oil and gas prices because they drive upstream companies to increase drilling and production. That higher production drives more resources through their pipelines, which boosts their adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and cash flows. So while higher oil prices generated tailwinds for Energy Transfer, they weren't as strong as the tailwinds for upstream companies.
Story Continues
Energy Transfer's business model is also a bit harder to understand than Oxy's. As an MLP, it blends a return of capital with its own income to deliver more tax-efficient distributions than traditional dividends. However, that income needs to be reported on a separate K-1 tax form every year, making it a less straightforward investment than other oil stocks.
Which stock is the better value?
For 2026, analysts expect Oxy's revenue and EPS to increase 19% and 283%, respectively. That would end its three-year streak of declining revenues and earnings. It would also indicate it's finally overcoming its badly timed, debt-driven acquisition of Anadarko in 2019. At $55, its stock looks undervalued at 14 times next year's earnings.
They also expect Oxy's adjusted EBITDA, which excludes its one-time expenses, to increase 29%. With an enterprise value of $63.5 billion, it trades at just four times that estimate. It also pays a decent forward yield of nearly 2%.
As for Energy Transfer, analysts expect its revenue and earnings per unit (EPU) to rise 27% and 22%, respectively, in 2026. They also expect its adjusted EBITDA to grow 16%.
At $19 with an enterprise value of $135.2 billion, Energy Transfer also looks like a bargain at 13 times and 7 times this year's earnings and adjusted EBITDA, respectively. However, it pays a much higher forward yield of 6.9%.
Which stock is the better long-term play?
Oxy has been a hotter oil stock than Energy Transfer this year, but that rally will fizzle out when oil prices retreat. Therefore, I believe Energy Transfer is still the better overall investment for income-seeking investors who want a simpler stock to buy, hold, and forget -- even though it's less exposed to soaring oil prices and requires more tax forms than Oxy.
Should you buy stock in Occidental Petroleum right now?
Before you buy stock in Occidental Petroleum, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Occidental Petroleum wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $471,827!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,319,291!*
Now, it’s worth noting Stock Advisor’s total average return is 986% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 11, 2026.
Leo Sun has positions in Energy Transfer. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
Better Oil Stock: Occidental Petroleum vs. Energy Transfer was originally published by The Motley Fool
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- Better Oil Stock: Occidental Petroleum vs. Energy Transfer
May 11, 2026 · fool.com
Which of these energy stocks is the better buy right now?
- Want $1,000 in Annual Passive Income? Invest $14,730 in This Ultra-High-Yield Dividend Stock
May 10, 2026
Reliable, high-yield income is especially appealing to many investors when the stock market is highly volatile. And with the ongoing Iran war, the potential for resurging inflation, and uncertainty related to the November mid-term elections, volatility isn't likely to go away anytime soon.
The good news is that several stocks offer a port in the storm plus attractive distributions. One especially stands out right now. Do you want $1,000 in annual passive income? Invest around $14,730 in Energy Transfer(NYSE: ET).
Will AI create the world's first trillionaire? Our team just released a report on a little-known company, called an "Indispensable Monopoly," providing the critical technology Nvidia and Intel both need.
Continue »Image source: Getty Images.
A durable, high-yield distribution
Energy Transfer's forward distribution yield currently stands at roughly 6.8%. This yield is much higher than the S&P 500's (SNPINDEX: ^GSPC) yield of slightly over 1%. But do you have to give up safety to obtain the income Energy Transfer offers? Not as much as you might think.
Yes, Energy Transfer has cut its distribution in the past. However, the midstream energy leader now boasts the strongest financial position in its history. It continues to generate more than enough cash flow to cover the distribution payout.
Management expects the company to grow its distribution by 3% to 5% annually. Executives also plan to maintain a stable leverage ratio, which should reassure investors concerned about the potential for rising debt to impact Energy Transfer's ability to fund its distributions.
Energy Transfer benefits from the conflict with Iran. Disruption in the Middle East makes oil and gas produced in the U.S. more attractive to countries around the world. Energy Transfer's more than 144,000 miles of pipeline transports much of these fuels.
What if the tensions between the U.S. and Iran are peacefully resolved, leading to a drop in oil prices? Energy Transfer shouldn't be affected very much. Around 90% of its estimated 2026 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) are fee-based. Commodity price fluctuations won't matter.
The outcome of the mid-term elections shouldn't impact Energy Transfer much, either. The company has an impressive backlog of capital projects that should drive growth in the coming years, regardless of which political party controls Washington, D.C.
Realistic, reliable income
The math is straightforward with Energy Transfer. An investment of $14,730 in this pipeline stock should easily generate at least $1,000 in passive income over the next 12 months.
Story Continues
One thing to note, though, is that Energy Transfer is structured as a master limited partnership (MLP). Investing in MLPs comes with some tax complexities. However, if you're willing to jump through a few extra tax hoops, buying this stock as part of a diversified portfolio could be a great solution for income investors.
Should you buy stock in Energy Transfer right now?
Before you buy stock in Energy Transfer, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Energy Transfer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $471,827!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,319,291!*
Now, it’s worth noting Stock Advisor’s total average return is 986% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 10, 2026.
Keith Speights has positions in Energy Transfer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Want $1,000 in Annual Passive Income? Invest $14,730 in This Ultra-High-Yield Dividend Stock was originally published by The Motley Fool
View Comments
- Want $1,000 in Annual Passive Income? Invest $14,730 in This Ultra-High-Yield Dividend Stock
May 10, 2026
Key Points
Energy Transfer offers high distribution yield of roughly 6.8%. The midstream leader expects to grow its distribution by 3% to 5% annually. Energy Transfer is largely insulated from several macroeconomic factors that could impact other stocks.10 stocks we like better than Energy Transfer ›
Reliable, high-yield income is especially appealing to many investors when the stock market is highly volatile. And with the ongoing Iran war, the potential for resurging inflation, and uncertainty related to the November mid-term elections, volatility isn't likely to go away anytime soon.
The good news is that several stocks offer a port in the storm plus attractive distributions. One especially stands out right now. Do you want $1,000 in annual passive income? Invest around $14,730 in Energy Transfer(NYSE: ET).
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
A durable, high-yield distribution
Energy Transfer's forward distribution yield currently stands at roughly 6.8%. This yield is much higher than the S&P 500's (SNPINDEX: ^GSPC) yield of slightly over 1%. But do you have to give up safety to obtain the income Energy Transfer offers? Not as much as you might think.
Yes, Energy Transfer has cut its distribution in the past. However, the midstream energy leader now boasts the strongest financial position in its history. It continues to generate more than enough cash flow to cover the distribution payout.
Management expects the company to grow its distribution by 3% to 5% annually. Executives also plan to maintain a stable leverage ratio, which should reassure investors concerned about the potential for rising debt to impact Energy Transfer's ability to fund its distributions.
Energy Transfer benefits from the conflict with Iran. Disruption in the Middle East makes oil and gas produced in the U.S. more attractive to countries around the world. Energy Transfer's more than 144,000 miles of pipeline transports much of these fuels.
What if the tensions between the U.S. and Iran are peacefully resolved, leading to a drop in oil prices? Energy Transfer shouldn't be affected very much. Around 90% of its estimated 2026 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) are fee-based. Commodity price fluctuations won't matter.
The outcome of the mid-term elections shouldn't impact Energy Transfer much, either. The company has an impressive backlog of capital projects that should drive growth in the coming years, regardless of which political party controls Washington, D.C.
Realistic, reliable income
The math is straightforward with Energy Transfer. An investment of $14,730 in this pipeline stock should easily generate at least $1,000 in passive income over the next 12 months.
One thing to note, though, is that Energy Transfer is structured as a master limited partnership (MLP). Investing in MLPs comes with some tax complexities. However, if you're willing to jump through a few extra tax hoops, buying this stock as part of a diversified portfolio could be a great solution for income investors.
Should you buy stock in Energy Transfer right now?
Before you buy stock in Energy Transfer, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Energy Transfer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $471,827!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,319,291!*
Now, it’s worth noting Stock Advisor’s total average return is 986% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 10, 2026.
Keith Speights has positions in Energy Transfer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
- Want $1,000 in Annual Passive Income? Invest $14,730 in This Ultra-High-Yield Dividend Stock
May 10, 2026 · fool.com
This pipeline stock pays a reliable and juicy distribution.
- Is It Too Late To Consider Energy Transfer (ET) After Its Strong Multi‑Year Run?
May 10, 2026
Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE.
Investors may be wondering if Energy Transfer at around US$19.92 is still offering value or if most of the opportunity has already been priced in. The stock has seen a 1.3% decline over the last 7 days, a 4.2% gain over 30 days, a 20.1% return year to date, and a 25.9% return over the past year, which may change how you think about both upside potential and risk. Recent attention on Energy Transfer has centered on its long term performance, with the stock returning 104.7% over 3 years and 196.2% over 5 years. These figures keep it on many investors' watchlists. That context is important when you weigh whether current pricing reflects the partnership's existing assets and cash flows or expectations about what comes next. On Simply Wall St's valuation framework, Energy Transfer has a value score of 4 out of 6. The rest of this article will walk through what that means using different valuation approaches, then finish by pointing to a more complete way to think about the stock's value overall.
Find out why Energy Transfer's 25.9% return over the last year is lagging behind its peers.
Approach 1: Energy Transfer Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model projects future cash flows and then discounts them back to today using a required rate of return, to estimate what the business might be worth right now.
For Energy Transfer, the most recent Free Cash Flow figure used in the model is about $5.6b. Analyst estimates and extrapolations feed into a 2 Stage Free Cash Flow to Equity model, with projected Free Cash Flow of $7.1b by 2030. Simply Wall St uses analyst forecasts for the earlier years, then extends those trends further out to build a ten year cash flow path.
Bringing all those projected cash flows back to today leads to an estimated intrinsic value of about $41.64 per unit. Compared with the recent price around $19.92, the model implies that Energy Transfer is trading at roughly a 52.2% discount to this DCF estimate, which suggests the stock screens as materially undervalued on this metric alone.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Energy Transfer is undervalued by 52.2%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.ET Discounted Cash Flow as at May 2026
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Energy Transfer.
Approach 2: Energy Transfer Price vs Earnings
For profitable companies, the P/E ratio is a useful way to see how much you are paying for each dollar of earnings, which makes it a straightforward check on whether the current price looks rich or conservative relative to profits.
Story Continues
What counts as a "normal" P/E depends on how the market views a stock's growth potential and risk. Higher expected growth or lower perceived risk can support a higher P/E, while slower growth or higher risk usually points to a lower multiple.
Energy Transfer currently trades on a P/E of about 16.7x, compared with an Oil and Gas industry average of around 14.2x and a peer group average of about 18.2x. Simply Wall St also calculates a proprietary “Fair Ratio” of 29.7x for Energy Transfer. This Fair Ratio is designed to reflect what P/E might be reasonable given factors such as earnings growth, industry, profit margin, market cap and key risks.
Because the Fair Ratio blends these company specific drivers, it can be more informative than a simple comparison with peers or the broad industry. With the current P/E at 16.7x versus a Fair Ratio of 29.7x, the stock screens as undervalued on this metric.
Result: UNDERVALUEDNYSE:ET P/E Ratio as at May 2026
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 18 top founder-led companies.
Upgrade Your Decision Making: Choose your Energy Transfer Narrative
Earlier we mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you attach a clear story about Energy Transfer to your numbers, link that story to a forecast for revenue, earnings and margins, and then compare your own fair value with the current price in a simple tool on the Community page that updates as news or earnings arrive. One investor might build a more optimistic Energy Transfer Narrative around gas projects, use higher future earnings near US$6.5b and a fair value closer to the upper analyst target of US$25.00. Another investor might focus on execution and energy transition risks, use earnings closer to US$4.2b and a fair value near the lower target of US$19.50, then use that gap between fair value and market price to decide whether the stock looks attractive to buy, worth holding, or closer to a sell for their own situation.
Do you think there's more to the story for Energy Transfer? Head over to our Community to see what others are saying!NYSE:ET 1-Year Stock Price Chart
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include ET.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
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- Energy Transfer Continues to Boost Its 6.7%-Yielding Dividend
May 9, 2026
Key Points
Energy Transfer has raised dividends quarterly for a number of years. That comes after slashing the payout by 50%. Energy Transfer has produced plenty of cash flow to support current payouts.10 stocks we like better than Energy Transfer ›
When screening for high dividend-yielding stocks, Energy Transfer (NYSE: ET) comes up. After all, the shares yield 6.7%, which puts it near the top of most lists.
That's a particularly attractive yield compared to the overall stock market. It's 6 times the S&P 500 index's 1.1% yield.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
But investing in dividend stocks isn't that simple, of course. If it were, you could just buy the highest dividend-yielding stocks.
It takes more work to better understand the company, including examining its fundamentals to determine whether it can afford the current dividends.
Image source: Getty Images.
History lesson
Before taking a look ahead to see about future payouts, it's worthwhile to take a step back. Energy Transfer has a bit of a checkered history when it comes to dividends. It slashed its quarterly payout in half, to $0.1525 a share, back in 2020. Energy Transfer cited the need to conserve cash, particularly in light of a downturn caused by COVID-19 and a high debt burden.
However, starting in 2021, the board of directors raised dividends regularly. In fact, Energy Transfer has raised the payment quarterly, including April's announcement that it would boost the dividend from $0.335 to $0.3375.
The company currently pays $1.35 per year, and investors have gotten used to regular increases over the last few years. It's time to look to see if Energy Transfer can afford to continue raising payouts.
Can it afford to raise dividends?
Energy Transfer's current results have been very good in the wake of market conditions caused by the Iran war. That caused disruptions in crude oil, causing U.S. energy companies to increase exports. That helps Energy Transfer's results since it transports and stores energy like oil, natural gas, and natural gas liquids (NGLs).
It set various company volume records in the recently reported first quarter. For instance, crude oil transportation volume grew 8% year over year.
This has translated into healthy cash flow. Q1 adjusted distributable cash flow grew to $2.7 billion, a 16.9% year-over-year increase. Distributable cash flow provides a useful metric about whether Energy Transfer can afford dividends since it's net income adjusted for certain non-cash items (e.g., depreciation, depletion, and amortization) minus distributions to preferred stockholders and maintenance capital expenditures.
Fortunately, the $2.7 billion in distributable cash flow provides more than enough to cover the $1.2 billion in dividends. What does the company plan to do with this excess cash flow? Invest in pipeline projects to fuel growth. It's positive that the company has enough to pay dividends and invest in the future.
Future dividends
Given the favorable climate and cash flow, it seems like a good bet that Energy Transfer will continue raising dividends, at least in the near term. Still, it'd be nice if the company had a longer record of increasing payouts, or even keeping them stable, during difficult times.
Encouragingly, management has made the balance sheet healthier over the years. It had $69.3 billion in long-term debt as of March 31, or a 67% debt-to-total capital ratio. At the end of 2020, Energy Transfer's long-term debt totaled $51.4 billion, which equated to a 74% debt-to-total capital ratio.
That should provide investors with a degree of comfort since the higher debt burden was one of the reasons management and the board of directors cut dividends.
Still, while the short-term outlook looks promising, investors should note that results can fluctuate. However, given its focus on fee-based revenue, it's much less reliant on oil and gas prices than energy and production (i.e., upstream) companies. Hence, it produces steadier cash flow to support distributions.
For those interested in regular dividend increases and high dividend yields, Energy Transfer seems to fit the bill. However, given its dividend history, I'd monitor the situation closely to see if conditions warrant sticking around.
Should you buy stock in Energy Transfer right now?
Before you buy stock in Energy Transfer, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Energy Transfer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $471,827!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,319,291!*
Now, it’s worth noting Stock Advisor’s total average return is 986% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 9, 2026.
Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
