Energy Transfer: A Most Agreeable Yield

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The market, my dear friends, is a fickle mistress. She rewards boldness, yet often mistakes mere activity for achievement. It is, therefore, with a certain detached amusement that one observes the recent performance of Energy Transfer LP (ET +0.21%). To miss expectations is, of course, a vulgar display, yet the stock, rather remarkably, declined only marginally after announcing its quarterly results. A triumph of appearances, one might say.

The reported earnings per share of $0.25, while somewhat shy of the analysts’ predicted $0.36 (a sum, I suspect, arrived at through a combination of hope and guesswork, as is so often the case with such pronouncements by S&P Global (SPGI 0.65%)), scarcely caused a ripple. It proves, if proof were needed, that the collective wisdom of the market is frequently less than wise.

This resilience, this quiet defiance of gravity, suggests a story far more compelling than a single quarterly snapshot. It is a tale, I believe, that deserves the attention of those who seek not fleeting excitement, but a steady, dependable income. Indeed, it is time, my friends, to consider a strategic investment in Energy Transfer. Let us examine why.

A Distribution of Singular Charm

What, after all, is the most persuasive argument for acquiring Energy Transfer? Its distribution, naturally. A yield of 7.2% is not merely respectable; it is positively captivating. To offer such a return in these uncertain times is a gesture of almost scandalous generosity.

And the generosity does not end there. The company recently announced a distribution increase exceeding 3% year over year. A most agreeable development. Co-CEO Thomas Long, with a commendable lack of hyperbole, suggested a long-term annual growth rate of 3% to 5%. One suspects he understands that true elegance lies in understatement.

The Strength Beneath the Surface

The recent earnings miss should not be interpreted as a sign of weakness. To judge a company by a single quarter is akin to judging a novel by its cover. Energy Transfer’s underlying business is, in fact, remarkably robust.

Last year, adjusted EBITDA reached a record $16 billion. The company has also increased its guidance for the coming year, anticipating EBITDA between $17.45 billion and $17.85 billion – a revision driven by the acquisition of J-W Power Company by USA Compression (USAC +1.28%), in which Energy Transfer holds a controlling interest. A shrewd move, one must concede.

Furthermore, the company has set new records in natural gas liquids fractionation and crude oil transportation. Volumes across the board have increased, with a particularly noteworthy 12% jump in NGL and refined product terminals. A symphony of success, if you will.

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The Promise of Further Refinement

Energy Transfer is poised for continued growth. The ramp-up of its Flexport NGL export project and the new Permian Basin processing plants will undoubtedly contribute to its future success. To anticipate growth is not mere optimism; it is a logical deduction.

The company is also leading the charge in securing contracts with data centers, including a significant agreement with Oracle (ORCL +0.24%). However, its growth is not limited to this sector. Co-CEO Marshall “Mackie” McRea rightly points out that population growth and manufacturing expansion are also key drivers. To diversify one’s interests is, after all, the mark of a civilized investor.

Let us not mistake Energy Transfer for a high-flying growth stock. It is not. But for those who seek a reliable income stream, a steady hand in a turbulent market, the growth it is likely to deliver is most attractive indeed. It is a quiet elegance, a subtle sophistication, and in my estimation, a most worthwhile investment.

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2026-02-20 12:52