The Energy Transfer (ET) stock price has done well in the past few years, helped by the strong demand for energy and the stable prices. Its total return in the past five years stood at over 82%, higher than Chevron’s 49%, Shell’s 51%, and Occidental’s 34%. Only ExxonMobil, which has returned 110% has done better. 

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Energy Transfer is doing well

Energy Transfer is a major player in the US energy complex yet many people don’t know it well. That’s because the company does not offer consumer-facing services.

Instead, it offers solutions that help to ensure that energy moves from the production zones to consumers. It is one of the biggest owners of oil and gas pipelines in the US, with its projects having over 130,000 miles across most states. 

Energy Transfer has several subsidiaries like Lake Charles LNG Company, Sunoco, and USA Compression Partners. 

The company’s business has grown in the past few years, with its revenue soaring from over $53 billion in 2019 to over $77 billion in the last financial year. Most of this revenue has been organic while others has been through strategic acquisitions. 

The latest big buyout was of Crestwood, a company with experience in the midstream sector in a $7.1 billion deal. It also acquired WTG Midstream this year in a $3.2 billion. WTG has expanded its natural gas pipeline and processsing network. 

Energy Transfer’s business is booming also because of the performance of oil and gas. Brent and West Texas Intermediate (WTI) have remained above $75 this year and analysts believe that the crisis in the Middle East will push it higher in the long term. 

In its recent financial results, Energy Transfer said that its crude oil transportation volume rose by 23%, reaching a record high. Oil exports rose by 11% while its NGL fractionation volumes rose by 11%.

The company hopes that the business will continue doing well this year. As a result, it sees its full-year EBITDA being in the range of $15.3 billion and $15.5 billion. This growth will be because of its organic performance and its WTG Midstream acquisition.

Energy Transfer dividend yield

In most cases, investors don’t allocate funds in companies like Energy Transfer and Enterprise Products Partners because of their growth. Instead, they invest in them because of their regular dividend payouts.

Energy Transfer is one of the top high-yield companies in the energy sector with a dividend yield of about 8%. This yield is higher than other energy firms like Exxon, Chevron, and Occidental. 

It is also substantially higher than other dividend ETFs like the JPMorgan Premium Equity (JEPI) and JPMorgan Nasdaq Premium Equity (JEPQ) funds. 

If things remains stable, then it means that a $10,000 investment in the Energy Transfer stock will bring in $800 a year. If the stock rises, as it has done in the past few years, it means that the return is also higher.

Energy Transfer, which Billionaire Bill Gross loves, is also not taxed like other companies because of its partnership model. 

As a Master Limited Partnership (MLP), Energy Transfer is taxed as a pass through entity, meaning that it does ot pay federal income tax at the federal level. Its income is then passed to its unitholders, who are not taxed as ordinary income. Instead, these investors only pay a tax when they sell their units. 

To be clear: in the long-term, investing in indices like the S&P 500 and Nasdaq 100 has been a better investment strategy since they do well. Energy Transfer, on the other hand, can be a highly cyclical company because its performance is impacted by energy prices. 

Indeed, Energy Transfer stock is still much lower than its all-time high of $34, which it reached in 2013. 

The other big risk to be aware of is that ET’s growth has come at a big cost in terms of its debt. Energy Transfer has about $1.9 billion in cash against $1.1 billion in short-term dent and over $52 billion in long-term debt. Despite this, the firm was recently upgraded by Moody’s, Fitch, and S&P.

Energy Transfer stock price analysis

ET chart by TradingView

The daily chart reveals that the ET stock price has done well in the past few years. It has risen from about $13 in January to over $15 today. The stock has formed an ascending channel pattern and remains above the 50-day moving average. 

The Energy Transfer stock price has formed an ascending channel pattern and is now at the lower side. Therefore, the stock will likely continue doing well this year as buyers target the year-to-date high of $16.50. 

Analysts are bullish on Energy Transfer with an average price target of $19.2, higher than the current $15.6. Some of the most bullish analysts are by companies like JP Morgan, Mizuho, Morgan Stanley, and UBS.

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