Energy Transfer and Western Midstream: High-Yield Investment Opportunities
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 19 2026
0mins
Source: Fool
- Valuation Advantage: Energy Transfer (ET) has a market cap of $60 billion and trades at just 7.5 times EBITDA, significantly lower than the 13.7 times average from 2011 to 2016, indicating its undervaluation and high growth potential in the midstream sector.
- Stable Dividend Yield: With a dividend yield of 7.6%, Energy Transfer plans to increase its distributions by 3% to 5% moving forward, reflecting its solid financial health and a coverage ratio of nearly 1.7 times, ensuring stable returns for investors.
- Strong Financials at Western Midstream: Western Midstream (WES) has a market cap of $17 billion and, while trading at a forward EV/EBITDA multiple of 8.5 times, offers an attractive dividend yield of 8.6% with plans for mid- to low-single-digit distribution growth, showcasing its ongoing cash flow capabilities.
- Strategic Acquisition and Market Expansion: By acquiring Aris Water Solutions, Western Midstream successfully diversified its customer base, reducing reliance on Occidental Petroleum from nearly 80% to below 45%, thus opening new growth opportunities in the produced water solutions market in the Delaware Basin.
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Analyst Views on ET
Wall Street analysts forecast ET stock price to rise
11 Analyst Rating
7 Buy
4 Hold
0 Sell
Moderate Buy
Current: 18.260
Low
17.00
Averages
20.65
High
23.00
Current: 18.260
Low
17.00
Averages
20.65
High
23.00
About ET
Energy Transfer LP owns and operates a diversified portfolios of energy assets in the United States, with more than 140,000 miles of pipeline and associated energy infrastructure. The Company’s strategic network spans 44 states with assets in all of the major United States production basins. Its core operations include complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (NGL) and refined product transportation and terminalling assets; and NGL fractionation. The Company’s segments include intrastate transportation and storage, interstate transportation and storage, midstream, NGL and refined products transportation and services, crude oil transportation and services, investment in Sunoco LP, investment in USA Compression Partners, LP (USAC), and all other. It also owns Lake Charles LNG Company, LLC, its wholly owned subsidiary, which owns an LNG import terminal and regasification facility.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Energy Transfer Set to Release Q4 Earnings Report
- Earnings Outlook: Energy Transfer is set to report its Q4 earnings on February 17, with little expectation for stock price volatility, as it has not moved more than 5% post-earnings in the last three years.
- Guidance Stability: The company issued its 2026 adjusted EBITDA guidance in early January, projecting between $17.3 billion and $17.7 billion, indicating a stable growth rate of 9% to 10%.
- Capital Expenditure Plans: Energy Transfer plans to allocate $5 billion to $5.5 billion for growth projects in 2026, an increase from the $4.6 billion budgeted for 2025, which is expected to generate approximately $900 million in incremental EBITDA.
- Attractive Dividend Stock: Despite the stable earnings outlook, Energy Transfer remains a high-yield dividend stock in the midstream energy sector, boasting a 7.4% yield and a solid balance sheet, making it a compelling long-term investment.
See More
Energy Transfer's Strong Growth Prospects and High-Yielding Distribution
- High-Yield Distribution: Energy Transfer currently boasts a distribution yield of approximately 7.5%, significantly higher than the S&P 500's yield of around 1.1%, making it an attractive option for passive income investors.
- Financial Stability: The company has distributed about 50% of its annual cash flows to investors over the past three years, with 90% derived from stable fee-based sources, ensuring a robust financial foundation and capacity for expansion.
- Sustained Growth Target: Energy Transfer aims to increase its distribution by 3% to 5% annually, having achieved over 3% growth in the past year, indicating strong potential for future distribution increases.
- Expansion Investment Plans: The company plans to invest $5 billion to $5.5 billion in organic expansion projects this year, with expected earnings growth of 7% to 10% due to the completion of several expansion initiatives, further enhancing its competitive position in the market.
See More
Key Companies to Monitor This Week: PCE, Walmart, Palo Alto, Analog Devices, Deere, and Others
- Market Performance: Equities experienced a decline last week, with all three major indexes falling by at least 1.2%.
- Economic Indicators: This downturn occurred despite a better-than-expected jobs report from the Bureau of Labor Statistics and a relatively stable inflation report.
See More
AI Turbulence Impacts Market Performance
- Increased Market Volatility: Last week, stocks in software, real estate, financial services, and logistics faced selling pressure due to concerns over AI-related disruptions, with the Nasdaq Composite falling 0.2% and a weekly loss of 2.1%, indicating market sensitivity to AI impacts.
- Consumer Spending Data Focus: This week's highlight will be the Personal Consumption Expenditures (PCE) report on Friday, which will provide insights into consumer spending in December and inflation trends, especially following last week's unexpected slowdown in the Consumer Price Index (CPI).
- Corporate Earnings in Spotlight: Walmart (WMT) is set to release its fourth-quarter earnings on Thursday, marking the first report under new CEO John Furner, making it a key indicator of consumer spending that the market is eagerly anticipating.
- Ongoing AI Impact: As AI tools' potential effects intensify across various sectors, software stocks like Salesforce (CRM) and ServiceNow (NOW) have seen significant declines, reflecting the market's heightened vigilance regarding AI disruptions, necessitating close monitoring of future industry developments.
See More
High-Yield Investment Opportunities in Energy Midstream Stocks
- Energy Transition Potential: Energy Transfer (ET) recently increased its annual distribution by over 3% to $1.34 per share, providing an approximate 7.4% forward yield, demonstrating a strong cash flow coverage ratio of 1.7 times, which boosts investor confidence.
- Growth Investment Plans: Energy Transfer plans to invest up to $5.5 billion in growth capex in 2025 to capitalize on opportunities arising from the artificial intelligence data center buildout, further solidifying its market position in the low-cost natural gas-rich Permian Basin.
- Stable Dividend Growth: Enterprise Products Partners (EPD) has increased its distribution for 27 consecutive years, currently yielding about 6.3%, and is expected to grow at a rate of 3% annually, showcasing resilience amid economic fluctuations.
- Flexible Financial Strategy: EPD is reducing its growth capex from $4.4 billion to a range of $2.5 billion to $2.9 billion, freeing up more discretionary cash flow for debt repayment, stock buybacks, or acquisitions, with adjusted EBITDA and cash flow projected to grow by double digits in 2027.
See More
Energy Transfer and Enterprise Products: High-Yield Potential
- Energy Transfer Dividend Increase: Energy Transfer recently raised its distribution by over 3%, resulting in an annual payout of $1.34 and a forward yield of approximately 7.4%, indicating strong growth potential within high-yield stocks.
- Robust Cash Flow Coverage: The company reported a distributable cash flow coverage ratio of 1.7 times in the third quarter, demonstrating the sustainability of its dividend payments, while an improved balance sheet and the highest percentage of take-or-pay contracts in its history provide strong support for future growth.
- Enterprise Products Stability: Enterprise Products Partners has increased its distribution for the 27th consecutive year, currently yielding about 6.3%, with a coverage ratio of 1.8 times in the fourth quarter, showcasing its stability and attractiveness amid economic fluctuations.
- Growth Investment Plans: Although Enterprise Products will reduce its growth capex from $4.4 billion to a range of $2.5 billion to $2.9 billion, it expects adjusted EBITDA and cash flow to grow by double digits by 2027, indicating strong future growth potential.
See More
Energy Transfer Set to Release Q4 Earnings Report
- Earnings Outlook: Energy Transfer is set to report its Q4 earnings on February 17, with little expectation for stock price volatility, as it has not moved more than 5% post-earnings in the last three years.
- Guidance Stability: The company issued its 2026 adjusted EBITDA guidance in early January, projecting between $17.3 billion and $17.7 billion, indicating a stable growth rate of 9% to 10%.
- Capital Expenditure Plans: Energy Transfer plans to allocate $5 billion to $5.5 billion for growth projects in 2026, an increase from the $4.6 billion budgeted for 2025, which is expected to generate approximately $900 million in incremental EBITDA.
- Attractive Dividend Stock: Despite the stable earnings outlook, Energy Transfer remains a high-yield dividend stock in the midstream energy sector, boasting a 7.4% yield and a solid balance sheet, making it a compelling long-term investment.
See More
Energy Transfer's Strong Growth Prospects and High-Yielding Distribution
- High-Yield Distribution: Energy Transfer currently boasts a distribution yield of approximately 7.5%, significantly higher than the S&P 500's yield of around 1.1%, making it an attractive option for passive income investors.
- Financial Stability: The company has distributed about 50% of its annual cash flows to investors over the past three years, with 90% derived from stable fee-based sources, ensuring a robust financial foundation and capacity for expansion.
- Sustained Growth Target: Energy Transfer aims to increase its distribution by 3% to 5% annually, having achieved over 3% growth in the past year, indicating strong potential for future distribution increases.
- Expansion Investment Plans: The company plans to invest $5 billion to $5.5 billion in organic expansion projects this year, with expected earnings growth of 7% to 10% due to the completion of several expansion initiatives, further enhancing its competitive position in the market.
See More
Key Companies to Monitor This Week: PCE, Walmart, Palo Alto, Analog Devices, Deere, and Others
- Market Performance: Equities experienced a decline last week, with all three major indexes falling by at least 1.2%.
- Economic Indicators: This downturn occurred despite a better-than-expected jobs report from the Bureau of Labor Statistics and a relatively stable inflation report.
See More
AI Turbulence Impacts Market Performance
- Increased Market Volatility: Last week, stocks in software, real estate, financial services, and logistics faced selling pressure due to concerns over AI-related disruptions, with the Nasdaq Composite falling 0.2% and a weekly loss of 2.1%, indicating market sensitivity to AI impacts.
- Consumer Spending Data Focus: This week's highlight will be the Personal Consumption Expenditures (PCE) report on Friday, which will provide insights into consumer spending in December and inflation trends, especially following last week's unexpected slowdown in the Consumer Price Index (CPI).
- Corporate Earnings in Spotlight: Walmart (WMT) is set to release its fourth-quarter earnings on Thursday, marking the first report under new CEO John Furner, making it a key indicator of consumer spending that the market is eagerly anticipating.
- Ongoing AI Impact: As AI tools' potential effects intensify across various sectors, software stocks like Salesforce (CRM) and ServiceNow (NOW) have seen significant declines, reflecting the market's heightened vigilance regarding AI disruptions, necessitating close monitoring of future industry developments.
See More
High-Yield Investment Opportunities in Energy Midstream Stocks
- Energy Transition Potential: Energy Transfer (ET) recently increased its annual distribution by over 3% to $1.34 per share, providing an approximate 7.4% forward yield, demonstrating a strong cash flow coverage ratio of 1.7 times, which boosts investor confidence.
- Growth Investment Plans: Energy Transfer plans to invest up to $5.5 billion in growth capex in 2025 to capitalize on opportunities arising from the artificial intelligence data center buildout, further solidifying its market position in the low-cost natural gas-rich Permian Basin.
- Stable Dividend Growth: Enterprise Products Partners (EPD) has increased its distribution for 27 consecutive years, currently yielding about 6.3%, and is expected to grow at a rate of 3% annually, showcasing resilience amid economic fluctuations.
- Flexible Financial Strategy: EPD is reducing its growth capex from $4.4 billion to a range of $2.5 billion to $2.9 billion, freeing up more discretionary cash flow for debt repayment, stock buybacks, or acquisitions, with adjusted EBITDA and cash flow projected to grow by double digits in 2027.
See More
Energy Transfer and Enterprise Products: High-Yield Potential
- Energy Transfer Dividend Increase: Energy Transfer recently raised its distribution by over 3%, resulting in an annual payout of $1.34 and a forward yield of approximately 7.4%, indicating strong growth potential within high-yield stocks.
- Robust Cash Flow Coverage: The company reported a distributable cash flow coverage ratio of 1.7 times in the third quarter, demonstrating the sustainability of its dividend payments, while an improved balance sheet and the highest percentage of take-or-pay contracts in its history provide strong support for future growth.
- Enterprise Products Stability: Enterprise Products Partners has increased its distribution for the 27th consecutive year, currently yielding about 6.3%, with a coverage ratio of 1.8 times in the fourth quarter, showcasing its stability and attractiveness amid economic fluctuations.
- Growth Investment Plans: Although Enterprise Products will reduce its growth capex from $4.4 billion to a range of $2.5 billion to $2.9 billion, it expects adjusted EBITDA and cash flow to grow by double digits by 2027, indicating strong future growth potential.
See More
