Energy Transfer's 6.8% Yield Is Rising-But Is It a Buy Before the Next Earnings Test?

ET looks attractive for income investors, but timing matters

The basic case for ET

ET looks like a measured buy for income investors who want a 6.8% current yield and can handle K-1 tax paperwork. The timing issue is straightforward: Energy Transfer plans to report the fourth quarter of 2025 on February 17, 2026. If the cash story remains as strong as the distribution increases suggest, waiting may mean buying after the yield falls or after the market reacts.

Why investors stay patient

The bull case is simple: the partnership keeps sending cash out, and it keeps rising. The annualized payout has moved from $1.34 to $1.36 annualized. According to the cited source, that also reflects the partnership's 19th straight quarterly distribution increase. For income buyers, that streak matters because it shows cash actually leaving the company and reaching unitholders.

Why the 2020 cut still matters

The bear case is memory. ET still carries the stigma of the 50% payout cut in early 2020. The latest results do not erase that history; they only make the current payout track easier to defend.

The latest quarter strengthened the cash-flow story

One quarter does not settle the debate, but it does shift it.

Cash generation mattered more than net income

The first-quarter report was strong where it counts for an income investor. Energy Transfer posted adjusted EBITDA of $4.94 billion, up from $4.10 billion a year earlier, while adjusted distributable cash flow reached $2.70 billion, compared with $2.31 billion. Net income attributable to partners fell to $1.25 billion from $1.32 billion. For a yield-focused investor, that mix is encouraging: the headline earnings dip matters less than the bigger improvement in cash generation.

The operating activity looks healthy

This was not a marginal improvement. Higher throughput helped drive the quarter. First-quarter results included record NGL and refined products terminal volumes, up 19%, along with stronger NGL exports, transportation, and fractionation volumes. That supports the view that the system is being used more, not less.

Management raised its 2026 outlook

Energy Transfer also lifted its full-year 2026 adjusted EBITDA guidance to $18.2 billion to $18.6 billion from $17.45 billion to $17.85 billion, while still planning $5.5 billion to $5.9 billion in growth capital spending. That raises the bar for future quarters. The key question is whether the partnership can keep turning that asset base and spending program into durable cash.

Distribution coverage is still the clearest test

The stronger quarter improves the case for ET, but the buy thesis only holds if coverage remains comfortable.

The payout math still works

In the latest quarter, Energy Transfer produced adjusted distributable cash flow of $2.70 billion while paying a $0.3400 quarterly distribution. On a quarterly basis, that implies very comfortable distribution coverage. For an income asset, that is the clearest signal that the payout is being supported by actual cash generation.

What investors should watch next

This setup works best for investors who want a simple income case: rising cash flow, an expanding payout, and coverage that remains easy to understand.

Watch these points in the next report: - Whether adjusted EBITDA and adjusted distributable cash flow stay strong. - Whether spending continues to support growth without weakening payout coverage. - Whether the distribution streak continues from the current $0.3400 quarterly distribution.

If coverage stays healthy, the yield looks more like a reflection of cash generation than a giveaway. If coverage tightens materially, the case becomes harder to defend.