Could Buying Energy Transfer Stock Today Set You Up for Life?

Energy Transfer (ET) has been making waves in the midstream energy sector, offering investors a compelling combination of high yield, growth opportunities, and an attractive valuation. But the question remains: could buying Energy Transfer stock today set you up for life? Let's dive into the details to find out.



1. High yield and increasing distribution

Energy Transfer's 7.8% yield is one of the highest in the MLP space, providing a substantial income stream for investors. Moreover, the company has committed to growing its distribution by 3% to 5% annually, ensuring that this income stream will increase over time. This combination of high yield and consistent growth makes Energy Transfer an appealing choice for income-oriented investors seeking a stable, long-term investment.



2. Growth opportunities

Energy Transfer has a robust expansion backlog, with plans to spend $3.1 billion on growth projects this year. These projects are expected to boost earnings before interest, taxes, depreciation, and amortization (EBITDA) by more than $370 million per year once fully ramped up. Additionally, Energy Transfer's acquisition strategy has contributed to its growth opportunities, with recent mergers and acquisitions boosting earnings and distributable cash flow.

3. AI data center energy supply chain

Energy Transfer's position in the AI data center energy supply chain is a significant growth opportunity. AI data centers require reliable, cheap, and uninterruptible energy, primarily supplied by natural gas and nuclear energy. While nuclear projects are still years away, Energy Transfer has already signed deals with power companies to supply more natural gas based on increasing AI demand and has had discussions with cloud computing companies looking to build onsite power generation. This strategic positioning in the AI energy supply chain sets Energy Transfer up for long-term growth, as AI data center demand is expected to surge in the coming years.



4. Attractive valuation

Despite its valuable midstream system, growth opportunities, and solid financial footing, Energy Transfer's stock trades at one of the lowest valuations in the MLP midstream space. Based on 2025 estimates, Energy Transfer trades at an enterprise-value-to-EBITDA (EV/EBITDA) multiple of 8.1 times, well below historical levels and one of the lowest valuations in the MLP space.

In conclusion, Energy Transfer's high yield, growth opportunities, position in the AI data center energy supply chain, and attractive valuation make it an appealing investment for long-term investors. While there are always risks associated with investing in the energy sector, Energy Transfer's strong fundamentals and strategic positioning set it up for potential long-term success. So, could buying Energy Transfer stock today set you up for life? Only time will tell, but the company's compelling investment case certainly makes it an attractive option for income-oriented investors seeking a stable, long-term investment.