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Globe and Mail
3 days ago
- Business
- Globe and Mail
Is Energy Transfer the Smartest Investment You Can Make Today?
Key Points Energy Transfer pays a lucrative distribution supported by stable cash flow and a strong financial profile. The MLP has lots of growth coming down the pipeline. It currently trades at one of the lowest valuations in its peer group. 10 stocks we like better than Energy Transfer › Energy Transfer (NYSE: ET) offers investors a high-yielding distribution (currently around 7.5%) backed by a rock-solid financial profile. The master limited partnership (MLP) is also growing at a healthy rate, which should continue. To top it off, the company trades at a very attractive valuation. Let's examine these features to determine whether they make Energy Transfer the smartest investment you can make today. A rock-solid income stream Energy Transfer's diversified midstream business generates substantial and stable cash flow, with fee-based contracts backing about 90% of the MLP 's annual earnings. During the first quarter, the company produced $2.3 billion of distributable cash flow. It distributed a little over $1.1 billion of this money to investors, retaining the rest to invest in expansion projects and maintain its strong financial profile. This conservative payout ratio allowed the MLP to maintain its leverage ratio in the lower half of its target range of 4 to 4.5 times. That has the company in its strongest financial position in its history. This strong financial profile makes the MLP's payout highly durable. A fully fueled growth engine Energy Transfer also has a healthy growth profile. The MLP is on track to grow its earnings before interest, taxes, depreciation, and amortization (EBITDA) by around 5% this year. Growth drivers include last year's acquisition of WTG Midstream, recently completed organic expansion projects, and healthy market conditions. The MLP has even more growth ahead. It's investing $5 billion into growth capital projects this year, including several gas processing plants, a major new natural gas pipeline, and some additional export capacity. These growth projects should come online in the second half of 2025 through the end of next year. Given that timeline, Energy Transfer expects these projects will boost its earnings growth rate in the 2026 to 2027 time frame. That provides the MLP with lots of near-term visibility into its earnings growth. Additionally, Energy Transfer is developing several expansion projects, including its Lake Charles LNG facility and a new gas supply line for an AI data center. The MLP has identified three major catalysts -- rising Permian production, increasing gas demand from emerging sectors such as AI data centers, and growing export demand for natural gas liquids -- that will provide it with numerous opportunities to continue expanding its midstream footprint in the years to come. Its ability to secure more new projects would further enhance and extend its earnings growth outlook. Energy Transfer's strong financial position also enables it to continue making accretive acquisitions that complement its operations and growth. The MLP has a long history as a consolidator in the midstream sector, often making at least one major deal each year. Visible earnings growth from its upcoming projects and future expansion opportunities supports the company's plan to deliver 3% to 5% annual distribution increases. All this for an attractive value Despite its strong growth and financial profiles, the MLP currently trades for an enterprise value (EV)-to-EBITDA ratio of less than 9. That's the second-lowest valuation among energy midstream companies, where the peer group average is around 12. This low valuation is a key reason for Energy Transfer's high distribution yield, which enhances its appeal compared to peers. A wise choice Energy Transfer offers a high-yielding distribution and has a strong growth profile. It's also in the best financial shape of its history and has a valuation near the bottom of its peer group. These features make the MLP look like a very attractive investment these days, as it could deliver strong total returns. It's especially smart for those seeking a lucrative and growing passive income stream with potential tax benefits from the Schedule K-1 Federal Tax Form that the MLP sends investors each year. Should you invest $1,000 in Energy Transfer right now? Before you buy stock in Energy Transfer, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Energy Transfer wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025
Yahoo
3 days ago
- Business
- Yahoo
Is Energy Transfer the Smartest Investment You Can Make Today?
Key Points Energy Transfer pays a lucrative distribution supported by stable cash flow and a strong financial profile. The MLP has lots of growth coming down the pipeline. It currently trades at one of the lowest valuations in its peer group. 10 stocks we like better than Energy Transfer › Energy Transfer (NYSE: ET) offers investors a high-yielding distribution (currently around 7.5%) backed by a rock-solid financial profile. The master limited partnership (MLP) is also growing at a healthy rate, which should continue. To top it off, the company trades at a very attractive valuation. Let's examine these features to determine whether they make Energy Transfer the smartest investment you can make today. A rock-solid income stream Energy Transfer's diversified midstream business generates substantial and stable cash flow, with fee-based contracts backing about 90% of the MLP's annual earnings. During the first quarter, the company produced $2.3 billion of distributable cash flow. It distributed a little over $1.1 billion of this money to investors, retaining the rest to invest in expansion projects and maintain its strong financial profile. This conservative payout ratio allowed the MLP to maintain its leverage ratio in the lower half of its target range of 4 to 4.5 times. That has the company in its strongest financial position in its history. This strong financial profile makes the MLP's payout highly durable. A fully fueled growth engine Energy Transfer also has a healthy growth profile. The MLP is on track to grow its earnings before interest, taxes, depreciation, and amortization (EBITDA) by around 5% this year. Growth drivers include last year's acquisition of WTG Midstream, recently completed organic expansion projects, and healthy market conditions. The MLP has even more growth ahead. It's investing $5 billion into growth capital projects this year, including several gas processing plants, a major new natural gas pipeline, and some additional export capacity. These growth projects should come online in the second half of 2025 through the end of next year. Given that timeline, Energy Transfer expects these projects will boost its earnings growth rate in the 2026 to 2027 time frame. That provides the MLP with lots of near-term visibility into its earnings growth. Additionally, Energy Transfer is developing several expansion projects, including its Lake Charles LNG facility and a new gas supply line for an AI data center. The MLP has identified three major catalysts -- rising Permian production, increasing gas demand from emerging sectors such as AI data centers, and growing export demand for natural gas liquids -- that will provide it with numerous opportunities to continue expanding its midstream footprint in the years to come. Its ability to secure more new projects would further enhance and extend its earnings growth outlook. Energy Transfer's strong financial position also enables it to continue making accretive acquisitions that complement its operations and growth. The MLP has a long history as a consolidator in the midstream sector, often making at least one major deal each year. Visible earnings growth from its upcoming projects and future expansion opportunities supports the company's plan to deliver 3% to 5% annual distribution increases. All this for an attractive value Despite its strong growth and financial profiles, the MLP currently trades for an enterprise value (EV)-to-EBITDA ratio of less than 9. That's the second-lowest valuation among energy midstream companies, where the peer group average is around 12. This low valuation is a key reason for Energy Transfer's high distribution yield, which enhances its appeal compared to peers. A wise choice Energy Transfer offers a high-yielding distribution and has a strong growth profile. It's also in the best financial shape of its history and has a valuation near the bottom of its peer group. These features make the MLP look like a very attractive investment these days, as it could deliver strong total returns. It's especially smart for those seeking a lucrative and growing passive income stream with potential tax benefits from the Schedule K-1 Federal Tax Form that the MLP sends investors each year. Should you buy stock in Energy Transfer right now? Before you buy stock in Energy Transfer, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Energy Transfer wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Matt DiLallo has positions in Energy Transfer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Is Energy Transfer the Smartest Investment You Can Make Today? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 days ago
- Business
- Yahoo
Is Energy Transfer the Smartest Investment You Can Make Today?
Key Points Energy Transfer pays a lucrative distribution supported by stable cash flow and a strong financial profile. The MLP has lots of growth coming down the pipeline. It currently trades at one of the lowest valuations in its peer group. 10 stocks we like better than Energy Transfer › Energy Transfer (NYSE: ET) offers investors a high-yielding distribution (currently around 7.5%) backed by a rock-solid financial profile. The master limited partnership (MLP) is also growing at a healthy rate, which should continue. To top it off, the company trades at a very attractive valuation. Let's examine these features to determine whether they make Energy Transfer the smartest investment you can make today. A rock-solid income stream Energy Transfer's diversified midstream business generates substantial and stable cash flow, with fee-based contracts backing about 90% of the MLP's annual earnings. During the first quarter, the company produced $2.3 billion of distributable cash flow. It distributed a little over $1.1 billion of this money to investors, retaining the rest to invest in expansion projects and maintain its strong financial profile. This conservative payout ratio allowed the MLP to maintain its leverage ratio in the lower half of its target range of 4 to 4.5 times. That has the company in its strongest financial position in its history. This strong financial profile makes the MLP's payout highly durable. A fully fueled growth engine Energy Transfer also has a healthy growth profile. The MLP is on track to grow its earnings before interest, taxes, depreciation, and amortization (EBITDA) by around 5% this year. Growth drivers include last year's acquisition of WTG Midstream, recently completed organic expansion projects, and healthy market conditions. The MLP has even more growth ahead. It's investing $5 billion into growth capital projects this year, including several gas processing plants, a major new natural gas pipeline, and some additional export capacity. These growth projects should come online in the second half of 2025 through the end of next year. Given that timeline, Energy Transfer expects these projects will boost its earnings growth rate in the 2026 to 2027 time frame. That provides the MLP with lots of near-term visibility into its earnings growth. Additionally, Energy Transfer is developing several expansion projects, including its Lake Charles LNG facility and a new gas supply line for an AI data center. The MLP has identified three major catalysts -- rising Permian production, increasing gas demand from emerging sectors such as AI data centers, and growing export demand for natural gas liquids -- that will provide it with numerous opportunities to continue expanding its midstream footprint in the years to come. Its ability to secure more new projects would further enhance and extend its earnings growth outlook. Energy Transfer's strong financial position also enables it to continue making accretive acquisitions that complement its operations and growth. The MLP has a long history as a consolidator in the midstream sector, often making at least one major deal each year. Visible earnings growth from its upcoming projects and future expansion opportunities supports the company's plan to deliver 3% to 5% annual distribution increases. All this for an attractive value Despite its strong growth and financial profiles, the MLP currently trades for an enterprise value (EV)-to-EBITDA ratio of less than 9. That's the second-lowest valuation among energy midstream companies, where the peer group average is around 12. This low valuation is a key reason for Energy Transfer's high distribution yield, which enhances its appeal compared to peers. A wise choice Energy Transfer offers a high-yielding distribution and has a strong growth profile. It's also in the best financial shape of its history and has a valuation near the bottom of its peer group. These features make the MLP look like a very attractive investment these days, as it could deliver strong total returns. It's especially smart for those seeking a lucrative and growing passive income stream with potential tax benefits from the Schedule K-1 Federal Tax Form that the MLP sends investors each year. Should you buy stock in Energy Transfer right now? Before you buy stock in Energy Transfer, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Energy Transfer wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Matt DiLallo has positions in Energy Transfer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Is Energy Transfer the Smartest Investment You Can Make Today? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
07-07-2025
- Business
- Yahoo
1 Top Dow Dividend Stock to Buy for Passive Income in July
Chevron currently has a dividend yield above 4.5%. The oil giant has the lowest breakeven level in the industry and a fortress financial profile. It has plenty of fuel to continue increasing its dividend. 10 stocks we like better than Chevron › The Dow Jones Industrial Average tracks 30 of the most prominent companies in the country. These mature companies are very profitable, which allows many of them to pay generous dividends. The index currently has a 1.8% dividend yield, which is higher than the S&P 500's 1.3% and the Nasdaq-100's 0.8%. The Dow is fertile ground for those seeking dividend income. It holds several higher-yielding dividend stocks with an excellent track record of increasing their payouts. One that stands out for income seekers this July is Chevron (NYSE: CVX). Here's why it's a great Dow stock to buy this month for passive income. Chevron's dividend yield is currently over 4.5%. A high dividend yield can sometimes be a warning sign that the payout isn't sustainable. However, that's not the case with Chevron. The oil giant has built a highly resilient portfolio. The company's business currently has a breakeven level of around $30 per barrel, the lowest in the industry. With crude oil prices in the mid-$60s, Chevron is generating a substantial amount of free cash flow. It produced $15 billion in free cash flow last year after funding capital expenditures of $16.4 billion and another $3.7 billion in the first quarter of 2025. With its dividend costing $3 billion a quarter, Chevron has an ample cushion. Chevron also has an elite balance sheet. Its leverage ratio was a low 14% at the end of the first quarter. That's well below its 20%-25% target range and toward the low end of its peer group's range. The company's combination of a low breakeven level and fortress balance sheet puts Chevron's high-yielding dividend on a firm foundation. Chevron has been investing heavily in high-return capital projects, which are driving growth in its production and free cash flow. The company and its partners recently completed the Future Growth Project in Kazakhstan and the Ballymore project in the Gulf of Mexico, also known as the Gulf of America in the United States. It has more projects in the Gulf and the Eastern Mediterranean that should come online soon. In addition, the company is developing its assets in the Permian and DJ basins in the U.S. Chevron estimates that its current slate of growth projects puts it on track to add an incremental $9 billion in annual free cash flow by next year, assuming a $60 oil price. On top of that, the company is waiting to close its mega deal for Hess. It agreed to buy the fellow oil and gas producer in late 2023 for $60 billion. A dispute with ExxonMobil over Hess' stake in their lucrative development offshore Guyana is currently holding up the transaction. The case has gone to arbitration, with a ruling expected soon. Chevron is so confident it will win that it spent $2.2 billion to buy nearly 5% of Hess' outstanding shares on the open market earlier this year. Winning the case will allow it to close the needle-moving deal, which will extend its production and free cash flow growth outlook into the 2030s. Even if it loses its case and can't close that deal, Chevron has plenty of growth ahead. As a result, the company's dividend growth engine won't run out of gas. The oil giant has increased its payout for 38 consecutive years, a period spanning multiple commodity price cycles. The company has delivered peer-leading dividend growth over the past decade. Chevron currently offers investors an attractive dividend yield due to the uncertainty over the fate of its Hess acquisition and the volatility of commodity prices. However, the company has a highly resilient portfolio and a fortress financial profile, which puts its high-yielding dividend on rock-solid ground. Meanwhile, it has lots of fuel to grow, even if it can't close its deal for Hess. Those features make it a great Dow stock to buy this July for a lucrative and growing stream of passive dividend income. Before you buy stock in Chevron, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Chevron wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $976,677!* Now, it's worth noting Stock Advisor's total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 30, 2025 Matt DiLallo has positions in Chevron. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy. 1 Top Dow Dividend Stock to Buy for Passive Income in July was originally published by The Motley Fool Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
05-07-2025
- Business
- Yahoo
Orchid Offers 20.1% Dividend Yield: A Powerful Income Play?
One of the most closely watched aspects of Orchid Island Capital ORC is its financial profile, particularly its dividend policy. This specialty finance mREIT company, which invests in residential mortgage-backed securities (RMBS) on a leveraged basis, offers favorable long-term stockholder returns and a substantial dividend yield. Income-seeking investors have a large appetite for REIT stocks, as U.S. law requires REITs to distribute 90% of their annual taxable income in the form of dividends. ORC has a record of paying out regular dividends, currently yielding a staggering 20.1% compared with the industry average of 12.4%. The company has increased its dividend three times over the past five years. Dividend Yield Image Source: Zacks Investment Research Dividend aside, ORC has a share repurchase plan in place. In 2022, the board of directors approved an increase in the authorization up to an additional 4.3 million shares, bringing the remaining authorization under the stock repurchase program to 6.2 million shares. As of April 25, 2025, the company had the authorization of 2.7 million shares available under the program. Orchid has a strong liquidity position. As of March 31, 2025, the company had $446.5 million in cash and cash equivalents, and unpledged securities. It has no debt as of the same date. Hence, given a strong liquidity position, ORC's capital distribution seems sustainable. AGNC Investment Corp. AGNC has a record of paying monthly dividends, currently yielding 15.3%. It now sits at a payout ratio of 81%. Dividends aside, AGNC Investment has a share repurchase plan in place. In October 2024, the company's board of directors announced a new plan authorizing it to repurchase up to $1 billion of common stock through Dec. 31, 2026. As of March 31, 2025, the full authorization was available for repurchase. As of March 31, 2025, AGNC Investment's liquidity, including unencumbered cash and Agency MBS, was $6 billion. Given this, AGNC's capital distribution seems sustainable. Annaly Capital Management, Inc. NLY also has a record of paying monthly dividends, currently yielding a staggering 14.3%. It now sits at a payout ratio of 101%. In March 2025, Annaly announced a cash dividend of 70 cents per share for the first quarter of 2025, marking a 7.7% hike from the prior payout. Till the end of the first quarter of 2025, the company had $7.5 billion of total assets available for financing, including cash and unencumbered Agency MBS of $4.7 billion, which can readily provide liquidity in times of adverse market conditions. This will support Annaly's capital distribution in the future. ORC shares have gained 1.4% year to date compared with the industry's growth of 7.3%. Price Performance Image Source: Zacks Investment Research From a valuation standpoint, Orchid trades at a forward price-to-tangible (P/TB) ratio of 0.80X, below the industry's average of 0.98X. Price-to-Tangible Book TTM Image Source: Zacks Investment Research The Zacks Consensus Estimate for ORC's 2025 and 2026 earnings implies year-over-year rise of 394.4% and 24.5%, respectively. Estimates for 2025 and 2026 have been unchanged over the past 30 days. Earnings Estimates Image Source: Zacks Investment Research Orchid currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks a#1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AGNC Investment Corp. (AGNC) : Free Stock Analysis Report Annaly Capital Management Inc (NLY) : Free Stock Analysis Report Orchid Island Capital, Inc. (ORC) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
