canakat
Introduction
When last discussing Energy Transfer (NYSE:ET) back in 2022 whilst they were busy working to restore their distributions, my previous article took time out to discuss how they were alike to the Berkshire Hathaway (
Energy Transfer: This Time, It's Different
Summary
- One year ago, Energy Transfer made restoring their distributions back to their previous level from late 2019 and early 2020 a top priority.
- They did not disappoint and going forwards this time, it is different than the last time unitholders were rewarded with this much cash.
- In the past, they struggled to generate free cash flow, whereas they now generate roughly twice what is required to fund their distribution payments.
- They also sport much lower leverage, which further decreases risks whilst prospects for further deleveraging help boost their growth outlook.
- The conversation surrounding their distributions is now about further growth, not cuts and thus given their high near-10% yield, I believe that maintaining my strong buy rating is appropriate.
I primarily focus on income investments, as well as deep value and contrarian opportunities.
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.
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