Energy Transfer, ticker ET on the NYSE, has been like catnip for income hunters. You know, those folks who drool over that juicy yield. And boy, has the market gone a little bonkers, right? Now, this thing spits out almost 8% yield. Tasty, yeah? But let’s talk turkey: is that lush yield something you can bank on long term, or is it just pie in the sky?
Here’s the deal: Energy Transfer ain’t your typical stock. We’re talking a master limited partnership, an MLP in finance gibberish. This means instead of dividends, they hand out distributions and the IRS looks at it funny. Here’s the fun part – you don’t cough up taxes right away when you’re rolling in those distributions. Nope, they just hang out, lowering that boring cost basis of yours until you decide to sell. Then bam! You’re hit with a capital gains tax. But in the meantime, you’re pocketing some sweet tax-deferred cash. Cha-ching!
The company’s got its fingers in all kinds of oil and gas pies, with pipelines sprawling across 44 states like some kind of energy octopus. Last year, those pipelines churned out a whopping $8.3 billion in distributable cash flow, up from $7.6 billion in 2023. Investors bagged $4.6 billion in distributions, which is like only 55% of what they made, so nothing to sweat about there, right?
Fast forward to 2025. Analysts think they’ll rake in $8.4 billion, while trimming what they hand out to $3.9 billion, dropping that payout ratio to 46%. But here’s the kicker: Energy Transfer sliced their distribution back in 2020. Yikes! When the world was flipping upside down. I get it, sometimes you gotta tighten the purse strings, but still. Makes me antsy. I’m the kind of person who wants management to protect that dividend come hell or high water.
For years now, they’ve been fattening up investor distributions, thanks to healthy cash flow. But I can’t help but wonder – what if they freak out next time the economy has a meltdown? As long as the suits don’t panic, Energy Transfer’s got a safe distribution going on.
So, what’s the Final Grade for Dividend Safety? How about a solid B? Not too shabby. Not an A, but come on, we’re not splitting atoms here.
Hey, got another stock in mind you want a safety rating on? Hit me up! Feel like seeing if we’ve got the 411 on your favorite stock? Don’t be shy, use that search bar on the Wealthy Retirement homepage. Oh, and heads up – Safety Net’s not playing with ETFs, mutual funds, or any of that jazz. Just singles, capisce?
