BUSINESS

This 7.8%-Yielding Stock Is Poised for Accelerating Growth

  • Energy Transfer delivered solid Q1 results.

  • The midstream leader should benefit from strong international demand and data center expansions.

  • Energy Transfer arguably offers pretty much everything an income investor would want in a stock.

  • 10 stocks we like better than Energy Transfer ›

Like most stocks, Energy Transfer LP (NYSE: ET) has been quite volatile so far in 2025. However, nervous investors received great news from the midstream energy company on Tuesday.

Energy Transfer’s unit price popped following its first-quarter update. But the Q1 numbers weren’t the main story. This 7.8%-yielding stock is poised for accelerating growth.

Energy Transfer announced net income for the first quarter of $1.32 billion, or $0.36 per diluted unit. This result reflected year-over-year growth of roughly 6.5%. It also beat the consensus analysts’ earnings estimate of $0.33 per unit.

The limited partnership (LP) also reported volume growth across the board. Interstate natural gas transportation volumes rose 3% year over year to a record high. Crude oil volumes soared 10%. Natural gas liquids (NGLs) volumes increased 4%. NGL exports jumped 5%. Terminal volumes for NGLs and refined products were up 4%. Midstream gathered volumes were more than 2% higher than in the prior-year period.

Granted, there were a few not-as-rosy parts of Energy Transfer’s update. The midstream energy leader’s revenue slipped 2.8% year over year to $21 billion. Distributable cash flow also fell from $2.36 billion in Q1 of 2024 to $2.31 billion in the recent quarter.

CEO Marshall “Mackie” McCrea also acknowledged in the Q1 earnings call that Energy Transfer has seen “a slowdown a little bit over the last few weeks.” He added that management foresees “some potential challenges over the next quarter or two.”

Image source: Getty Images.

Any industry softness should be only temporary, though. McCrea said, “But, a year, two years through 10 years, we’re extremely bullish on our industry and on the need for all the products that we transport.” He explained, “This is what happens in this industry. It will slow down, and then it will come back as a barn burner. We certainly anticipate that happening with oil but even ten-fold on gas.”

International demand for butane, ethane, and propane is a bright spot for Energy Transfer. China is a major customer, but not the only one. McCrea stated, “[W]e really don’t expect to see any major challenges, if any challenges at all, selling out our terminal every month, the rest of this year.”


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