Energy Transfer: A Very High 12%+ Distribution Yield Is Now Their Top Priority

Summary

• Energy Transfer kicked off 2022 by lifting their distributions 15% and has now made reinstating their former distributions their top priority.
• On their current unit price, this would see their distribution yield at a very high 12%+.
• Given their ability to generate massive free cash flow, they can easily fund these distribution payments whilst also having a couple of billion dollars spare.
• Whilst their leverage is high, it marks a sizeable improvement versus 2020 and does not pose any issues to their reinsating their distributions.
• Since this will be virtually certain to push their unit price higher in tandem, I believe that maintaining my strong buy rating is appropriate.

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Introduction

After enduring a painful distribution reduction during late 2020 that halved their payments, thankfully the outlook was far more positive one year later for the unitholders of Energy Transfer (NYSE:ET) with the prospects of

Analyst’s Disclosure:I/we have a beneficial long position in the shares of ET either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.