Should I Buy Energy Transfer (ET)? Finance YouTuber Analysis

The YouTuber recommends Energy Transfer as a key player in providing natural gas to new data centers, highlighting its extensive pipeline network and long-term fee-based contracts. They note its 7% dividend yield, which is well-covered by cash flow, and its potential for both growth and income, with Wall Street analysts projecting over 20% upside.

“Energy Transfer pays a 7% dividend, more than four times what the average S&P 500 stock hands to you right now. And it's not exactly fragile because the business brings in a little over twice the cash that it needs to cover the dividend.”

The YouTuber recommends Energy Transfer due to the long-term tailwinds for natural gas stocks. The company recently signed an agreement to provide 1.2 gigawatts of off-grid power for a data center, aligning with the expected doubling of energy demand by 2028 and increased US energy exports to the EU, suggesting years of upside.

“midstream pipeline operator Energy Transfer, ticker ET, signed an agreement to provide 1.2 gawatts of off-grid power for a data center operated by Cloudburst in February.”

The analyst recommends Energy Transfer for its high dividend yield and strong historical returns. As a master limited partnership (MLP), it owns essential oil and gas infrastructure, generating fee-based income that provides stability. The special tax treatment of its dividend, combined with a recent drop in share price, presents a strong upside potential.

“ET is one of the largest and well diversified among the master limited partnerships or MLPS, companies that own oil and gas infrastructure like pipelines, storage, and transportation. From these, they collect fees from energy companies using those assets.”

The YouTuber recommends investing in Master Limited Partnerships (MLPs) like Energy Transfer due to their tax advantages. He explains that MLPs offer high yields and two built-in tax breaks: a significant portion of distributions are considered return of capital, lowering the cost basis, and assets passed through an estate receive a step-up in basis, effectively making most distributions tax-free for the investor and their heirs.

“MLPs like Energy Transfer not only offer Market busting yields as high as 10 percent but come with two built-in tax breaks that make them better than dividend stocks.”

The YouTuber considers Energy Transfer a favorite energy stock due to its large pipeline network and safety as an MLP. The company recently increased its dividend to 7.2% and is expected to generate massive cash flow as capital spending decreases while energy prices remain high. Analysts project a 20% upside to $11.55 per share.

“energy transfer ticker et is one of my favorite energy stocks and i'm not alone with nearly 2 000 views on this stock and 225 investors following it”

The YouTuber recommends Energy Transfer, a master limited partnership, citing its large market cap and extensive pipeline network providing safety. The thesis is that energy companies will spend less on new exploration, leading to higher cash flow and dividends. Energy Transfer's capital spending has significantly decreased, resulting in projected earnings growth and a low price-to-cash flow ratio of 3.65.

“energy transfer spent 5.5 billion dollars in 2017 on developing pipelines and assets but is forecasting capital spending of just 1.6 billion this year that's resulting in earnings jumping from 7.3 billion five years ago to as high as 13 billion this year”

The YouTuber suggests Energy Transfer, an MLP, due to its strong balance sheet and diversified revenues in storage, transportation, and terminals. Higher inflation could lead to increased oil prices, which historically has boosted ET's share price.

“Our third stock to buy for stagflation is one of the largest mlps energy transfer ticker et with its 6.3 dividend yield.”