Investing $1,000 in Energy Transfer's Stock Five Years Ago Would Have Resulted in This Amount Now
Energy Transfer, often abbreviated as ET (0.86%), is a popular investment choice due to its impressive yield. Its distribution yield exceeds 6.5%, significantly surpassing the S&P 500's dividend yield of 1.2%. Over the past five years, this high yield has contributed significantly to ET's total return.
Let's imagine you invested $1,000 in ET five years ago. Back then, ET's units were trading around $13.67 each. Fast forward to now, the MLP's unit price stands at around $19.60, resulting in a roughly 45% gain or an annualized return of 7.7%. Considering this growth, your initial $1,000 investment would be worth $1,448 today.
For comparison, during the same period, the S&P 500 has absolutely soared with a return of 84.6% (13% annualized). This growth would have translated your $1,000 investment into $1,846.
While ET's price appreciation is impressive, it's essential to acknowledge the lucrative distributions paid by the MLP. During the pandemic, ET reduced its distribution by 50% to secure additional funds for debt reduction. However, post-pandemic, ET has rebuilt their payments, and the distribution is now higher than its pre-pandemic level.
If you factor in these distributions, along with dividend reinvestment, ET's total return skyrockets to 129.6% (18.1% annualized). This growth rate surpasses the S&P 500's total return when accounting for dividend income (98.8%, 14.7% annualized).
To put this return into perspective, an initial $1,000 investment in ET five years ago, with dividend reinvestment, would now amount to $2,296. Conversely, a $1,000 investment in an S&P 500 index fund, with dividend reinvestment, would have grown to $1,988.
In conclusion, ET's distribution plays a significant role in boosting its returns. ET has plans to increase its payout by approximately 3% to 5% annually. This potential growth could sustain ET in generating market-beating returns in our future investment adventures.
Despite ET's impressive price appreciation, its success in the finance world can also be attributed to its role as a giant in the midstream sector. Many investors view ET as an attractive investment option due to its status as an MLP, providing consistent distributions.
The lucrative distributions paid by ET have been a key factor in its ability to outperform the S&P 500. For example, if you reinvested your ET distributions, your initial $1,000 investment could have grown to a substantial $2,296 over the past five years.
Investors seeking aggressive yields in the finance world often turn to income-focused investments like ET. The MLP's distribution yield, currently standing at around 7%, is significantly higher than traditional investments like stocks or bonds.
To maximize returns, many investors choose to incorporate both price appreciation and distributions into their investment analysis. By considering both factors, investors can capitalize on ET's impressive 129.6% total return over the past five years, surpassing the S&P 500's total return.
