Energy Transfer's Dip Below $18: A Strategic Buying Opportunity Amid an Impending Growth Surge

Energy Transfer LP (ET) has long been a stalwart in the energy infrastructure sector, but its recent dip below $18 has sparked debate among investors. While the stock's year-to-date decline of nearly 10% reflects near-term headwinds, a closer look reveals a compelling opportunity. A confluence of factors—including undervalued pricing, an attractive distribution yield, and a robust project pipeline—positions ET as a prime candidate for long-term gains. This article dissects the rationale for buying now, despite 2025's sluggish growth, and why patience could pay off handsomely by 2026–2027.

Valuation: A Bargain in a High-Yield Package

Energy Transfer's current valuation sits at its second-lowest in its peer group, with a dividend yield of 7.3% at prices below $18. This compares favorably to industry peers like Enbridge (ENB) and Kinder Morgan (KMI), which trade at higher multiples.

The stock's dip has created a rare entry point. While 2025 EBITDA growth is projected to rise only 5%—a slowdown from 2024's record $15.5 billion—management has emphasized that this is a transitional phase. Capital is being reinvested into projects that will fuel future growth, such as the $5 billion allocated to organic infrastructure in 2025, up from $3 billion in 2024.

The Dividend: A Steady Anchor in Volatile Markets

Energy Transfer's 7.3% distribution yield is among the highest in the midstream sector. Historically, ET has prioritized maintaining payouts even during downturns, a testament to its strong cash flow. With a current price of ~$17.85, the yield offers investors a compelling income stream while they wait for projects to come online.

Upcoming Projects: The Catalyst for 2026–2027 Growth

The slowdown in 2025 is not a sign of weakness but a strategic pause. Two marquee projects are poised to transform ET's earnings trajectory:

1. Hugh Brinson Natural Gas Pipeline ($2.7 Billion): Set to enter service in late 2026, this pipeline will transport ~1.2 billion cubic feet of natural gas daily, primarily to serve growing demand in the Northeast.
2. Lake Charles LNG Terminal: A partnership with MidOcean Energy (30% stake), this project will export ~10 million tonnes of liquefied natural gas annually, capitalizing on global energy shortages.

These projects alone could boost ET's EBITDA by $1.2–1.5 billion annually by 2027. Additionally, ET's 21% stake in Sunoco LP—a key player in the refining and distribution sector—adds further upside. Sunoco's $9.1 billion acquisition of Parkland could solidify its dominance in the fuels market, indirectly benefiting ET.

Strategic Moves: Positioning for the Future

Beyond the capital projects, ET is diversifying its revenue streams. Recent partnerships with AI data centers to supply gas underscore its adaptability to emerging energy demands. Meanwhile, the company's $5 billion organic investment in 2025 signals confidence in its long-term vision.

The Case for Buying Now

The near-term outlook is muted, but the long-term story is compelling. Investors who buy at current prices can lock in:
- A 7.3% yield with minimal risk to the payout.
- Exposure to projects that will drive 20–30% EBITDA growth by 2027.
- A valuation discount compared to peers, with room for re-rating as projects come online.

Risks to Consider

• Regulatory Delays: Projects like Lake Charles LNG face permitting hurdles, though ET has a strong track record of navigating approvals.
• Commodity Price Volatility: Natural gas prices could fluctuate, though long-term contracts underpin much of ET's revenue.
• Economic Downturn: A severe recession could suppress energy demand, though infrastructure plays like ET tend to weather downturns better than pure-play commodity firms.

Conclusion: A Rare Buying Opportunity

Energy Transfer's dip below $18 is a temporary stumble in a decades-long growth story. The combination of a high yield, undervalued stock, and transformative projects makes this a compelling entry point for investors with a 3–5 year horizon. While 2025's muted growth is a speed bump, the road ahead is paved with opportunities.

For income-focused investors and those betting on energy infrastructure's resilience, ET's current price offers a rare chance to buy a quality asset at a discount. The coming years will likely see this stock rise as projects materialize—making today's dip a strategic move, not a retreat.

Investment Recommendation: Hold or Buy with a target price of $20–22 by end-2027.