Energy Transfer’s Q1 Dividend Signal: A Prelude to Infrastructure Growth

Energy Transfer LP (ET) is set to release its Q1 2025 earnings on May 6, 2025, alongside a dividend payment that underscores its strategic pivot toward high-return infrastructure projects. Despite a slight adjustment to its quarterly dividend—$0.3275 per unit, a minor decrease from the previous $0.33—the company’s actions reflect confidence in its ability to sustain cash flow through growth initiatives. This article explores how ET’s dividend decision and operational progress position it as a key player in the U.S. energy infrastructure renaissance.

The Dividend Adjustment: A Strategic Move, Not a Retreat

While the dividend per unit decreased slightly, ET’s payout ratio of 102.34% signals its commitment to returning capital to investors even as it reinvests in growth. Analysts project Q1 EPS of $0.33, aligning closely with the adjusted dividend, which implies ET’s confidence in maintaining earnings momentum. The annualized dividend yield of 7.92% remains compelling for income-focused investors, especially amid a “Moderate Buy” consensus rating with a $22.09 price target—a 33% premium to its current $16.54 stock price.

Operational Momentum: Volumes and EBITDA on the Rise

ET’s Q1 performance is expected to reflect strong operational execution:
- Midstream Volumes: Analysts forecast gathered volumes to hit 20,743 BBtu/day, up 4% year-over-year, driven by Permian Basin expansions.
- NGL Growth: NGL production is projected to rise to 1,075 million barrels of oil per day (MMbopd), a 21% increase from 2024, fueled by processing plant upgrades.
- Segment EBITDA: The NGL and refined products segment is expected to report $1.06 billion in Q1 EBITDA, up 7% year-over-year, as export capacity expands.

These metrics align with ET’s 2025 guidance of $16.1–16.5 billion in Adjusted EBITDA, a 5% increase over 2024.

Growth Projects: The Engine Behind Long-Term Value

ET’s $5.0 billion 2025 capital budget prioritizes high-return projects that will drive EBITDA growth post-2026:

1. Hugh Brinson Pipeline:
2. Phase 1 (completed by late 2026) will transport 1.5 Bcf/day of Permian natural gas to Texas markets, with potential expansion to 2.2 Bcf/day.

3. Supports power plant and data center demand, including the Stargate data center in Abilene.

4. LNG and NGL Exports:

5. The Lake Charles LNG terminal secured a 20-year deal with Chevron for 2 million tons/year, with an FID target for late 2025.

6. Nederland terminal upgrades will enable ethylene exports by late 2025, capitalizing on global NGL demand.

7. Permian Midstream:

8. The Mustang Draw processing plant (275 MMcf/day capacity) and Badger plant upgrades will boost Permian production, supporting crude and NGL volumes.

Strategic Partnerships: Diversifying Revenue Streams

ET’s diversification efforts are paying off:
- Cloudburst Data Center: A 450 million MMBtu/year supply deal for a Texas AI-focused data center highlights ET’s entry into the tech-infrastructure sector.
- Electric Generation: Eight 10-megawatt natural gas-fired plants in Texas improve grid reliability and reduce dependency on external power sources.

These initiatives reduce ET’s reliance on commodity price volatility, as 90% of EBITDA comes from fee-based contracts.

Risks and Considerations

While ET’s growth story is compelling, risks include:
- Regulatory Delays: Projects like Lake Charles LNG require permits that could face political headwinds.
- Commodity Volatility: Despite fee-based contracts, crude oil and NGL prices affect midstream volumes.

Conclusion: A Growth Story Rooted in Infrastructure

Energy Transfer’s Q1 dividend adjustment, paired with its $5.0 billion capex plan and strategic projects, signals a disciplined approach to balancing income returns and long-term value creation. With $16.1–16.5 billion in projected 2025 EBITDA, ET is well-positioned to capitalize on rising Permian production, global LNG demand, and industrial gas needs. Analysts’ $22.09 price target and the company’s $1.31 annualized dividend make ET an attractive play on U.S. energy infrastructure growth.

Investors should monitor ET’s Q1 earnings for updates on:
- Hugh Brinson Pipeline progress,
- Nederland terminal ethylene exports, and
- Permian midstream volumes.

With its vast asset base and a track record of executing high-return projects, ET is building a foundation for sustained growth—a dividend “adjustment” now could herald a surge later.