Energy Transfer offers strong dividend yield and stable cash flow, favorable for growth

From Yahoo Finance: 2025-06-29 18:14:00

Energy Transfer offers a 7.1% dividend yield, attracting income-focused investors. The midstream operator has a diverse portfolio across key U.S. energy basins. Specific tax implications come with investing in master limited partnerships like Energy Transfer. With a stable cash flow from its midstream operations, the company is well-positioned for growth in a favorable regulatory environment.

Operating as a master limited partnership, Energy Transfer avoids corporate taxes, passing profits to investors. Revenue comes from transporting oil, gas, and liquids under long-term contracts. Reliable cash flow enables high, consistent distributions, with plans to grow 3-5% annually. The company’s large, diversified energy infrastructure network benefits from increased energy production in the U.S.

Despite aggressive acquisitions and capital-intensive projects, Energy Transfer has reduced its debt burden. It aims for a lower leverage ratio, now between 4.0 to 4.5 times EBITDA. Investors should note the unique tax treatment of MLPs, including potential UBTI. This tax structure may complicate tax filing, making Energy Transfer more suitable for taxable brokerage accounts.

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Read more: Is Energy Transfer Stock a Buy Now?