Energy Transfer: A Most Agreeable Flow

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One observes that Energy Transfer (ET +1.34%) currently offers a dividend yield that is, shall we say, rather generous – exceeding seven percent at the last reckoning. The usual explanation for such a phenomenon is a lamentable lack of promising avenues for investment. But, darling, how dreadfully pedestrian. With Energy Transfer, the reverse appears to be true. They simply can’t stop accumulating expansion projects. It’s all rather… energetic.

Adding to the List

Energy Transfer, in partnership with the ever-reliable Kinder Morgan, has recently given the nod to two further expansions on the Florida Gas Transmission pipeline. Apparently, Florida requires more gas. Who knew? These projects, predictably, aim to address the growing demands of the Sunshine State. One can only hope it doesn’t encourage any further migration.

  • FGT Phase IX Project: A modest extension, involving some eighty-two miles of looping pipeline and various improvements. Completion is anticipated in the fourth quarter of 2028, which, frankly, feels like an eternity.
  • South Florida Project: A new thirty-seven-mile lateral, designed to enhance reliability and efficiency. Expected in the first quarter of 2030. One wonders if they’ve considered simply turning the gas on and hoping for the best.

Energy Transfer will contribute $535 million to Phase IX and another $110 million to the South Florida endeavour, while Kinder Morgan, bless their predictable hearts, will foot the remaining bill, up to $700 million. It extends their growth visibility, naturally, and provides a rather comforting projection into the early part of the next decade. One suspects accountants are delighted.

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The Building Boom Continues

Energy Transfer anticipates investing between $5 and $5.5 billion in growth capital this year. A considerable sum, wouldn’t you agree? This expenditure will support projects slated for completion over the next several years, including Phase I of the $2.7 billion Hugh Brinson pipeline, the Mustang Draw gas processing plants, and pipelines to supply gas to power plants and data centres. All frightfully important, of course. They’re also engaged with the rather ambitious $5.6 billion Transwestern Pipeline expansion, expected in late 2029. One trusts they have sufficient hard hats.

And the projects keep coming. They’re even contemplating the Dakota Access North Project, aiming to increase Canadian crude oil flow into the U.S. They’re also catering to the insatiable appetite of data centres and gas-fired power plants. So many expansions, in fact, they’ve decided to temporarily suspend development of the Lake Charles LNG export project. Apparently, gas pipelines offer a more… sensible return. One can’t fault their pragmatism.

This abundance of activity is, unsurprisingly, accelerating earnings growth. They expect adjusted EBITDA to grow by 9 to 12 percent this year, a marked improvement over last year’s paltry 3 percent. Given the size of their backlog, one anticipates continued, brisk growth. Which, naturally, supports their plans to increase the high-yielding distribution by 3 to 5 percent annually. A most agreeable prospect.

High-Octane Potential

Energy Transfer’s ever-expanding list of projects is, quite simply, fueling both earnings and distribution growth. This combination of income and growth, one dares suggest, could provide robust total returns in 2026 and beyond. A compelling long-term investment opportunity, wouldn’t you say? Or, at the very least, a diverting one.

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2026-02-19 13:13