Buffet Radar: Energy Transfer (ET)
Last year, the energy market improved conditions, benefiting Energy Transfer. The volume of oil and gas flowing through the company's pipeline system and other assets increased due to producers being encouraged by higher oil and gas prices to enhance their output. Acquisitions and expansion initiatives were advantageous to $ET as well.
Due to these drivers, Energy Transfer's third-quarter profitability and cash flow increased by 20%. They also placed the business on track to outperform its initial projection for full-year earnings. With room to spare, the MLP was able to generate enough cash flow to pay off its debt and finance its high-yielding distribution and expansion program.
The business of Energy Transfer is getting more robust, and the company is making a ton of cash, which allows it to pay out a sizable distribution, finance development plans, and pay down debt. The corporation should be able to keep increasing its cash flow and distribution in the future because of those last two attributes. This makes it a very appealing purchase for individuals looking for a sizable passive income stream that should increase in size over the next few years.
Last year, Energy Transfer put on an incredible comeback. The MLP had to reduce its distribution in 2020 to strengthen its balance sheet, but after getting its finances in order last year, it could give investors more money back.
Energy Transfer is working on several growth projects and has more planned, which could allow it to keep raising its payout. If the company can maintain its dividend growth, it should have the means to generate total returns that outperform the market in the years to come. Because of this, it can be a desirable choice for people looking for income and upside possibilities.
Source: Yahoo Finance