energy investments: could they be the wisest financial decisions you're considering currently?
Investors looking for a lucrative and growing passive income stream may find Energy Transfer (ET) an attractive option. The company offers a high-yielding distribution of approximately 7.5%, making it a standout choice compared to its peers [1].
Energy Transfer's strong financial profile, backed by a conservative payout ratio, ensures that its payout remains highly durable [1]. The company's low valuation, with an enterprise value (EV)-to-EBITDA ratio of less than 9, further enhances its appeal [1].
The company's growth drivers include last year's acquisition of WTG Midstream, organic expansion projects, and healthy market conditions. Energy Transfer is investing $5 billion into growth capital projects this year, including the development of the Lake Charles LNG facility and a new gas supply line for an AI data center [1]. These projects are expected to come online in the second half of 2025 through the end of next year.
In the first quarter, Energy Transfer produced $2.3 billion of distributable cash flow, of which over $1.1 billion was distributed to investors [1]. The remaining cash flow is being retained for expansion projects and financial maintenance.
The company's midstream business generates substantial and stable cash flow, with fee-based contracts backing about 90% of its annual earnings. This strong financial position is Energy Transfer's strongest in its history [1].
The projected earnings growth rate for Energy Transfer in the 2026-2027 timeframe is expected to accelerate beyond the 5% growth forecast for 2025. This acceleration is supported by significant investments in growth capital projects such as new natural gas pipelines, gas processing plants, and increased export capacity [1].
These initiatives are expected to fuel earnings growth acceleration starting in 2026 and continuing into 2027. While no precise numerical growth rates for 2026-2027 have been explicitly stated, the trend indicates growth exceeding the 5% annual earnings growth estimated for 2025, implying likely mid-single-digit or better earnings growth during 2026-2027 [1].
Energy Transfer expects these projects will boost its earnings growth rate in the 2026-2027 time frame, providing opportunities to expand its midstream footprint. The company has identified three major catalysts - rising Permian production, increasing gas demand from emerging sectors such as AI data centers, and growing export demand for natural gas liquids - that will support this expansion [1].
In summary, Energy Transfer offers investors a high-yielding distribution and a strong financial position, with growth projects expected to drive accelerated earnings growth in the 2026-2027 time frame.
Investing in Energy Transfer (ET) within the finance industry could yield lucrative returns, given its high-yielding distribution of approximately 7.5%.
Energy Transfer's ongoing investments in growth capital projects, such as the Lake Charles LNG facility and a new gas supply line for an AI data center, could boost its earnings growth rate in the 2026-2027 time frame.
Investors looking at the energy sector may find Energy Transfer's strong financial profile, supported by a substantial and stable cash flow, appealing, particularly due to its fee-based contracts backing about 90% of its annual earnings.
