{"id":13280,"date":"2025-04-10T05:38:39","date_gmt":"2025-04-10T05:38:39","guid":{"rendered":"https:\/\/finderica.com\/?p=13280"},"modified":"2025-04-10T05:38:39","modified_gmt":"2025-04-10T05:38:39","slug":"energy-transfer-cut-its-dividend-once-will-they-do-it-again","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=13280","title":{"rendered":"Energy Transfer Cut Its Dividend Once \u2013 Will They Do It Again?"},"content":{"rendered":"
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Energy Transfer<\/strong> (NYSE: ET) is a favorite among income investors due to its strong yield.<\/p>\n

And now, thanks to the meltdown in the markets, the stock yields nearly 8%, making it even more attractive.<\/p>\n

But can investors rely on that high yield going forward?<\/p>\n

Energy Transfer is a master limited partnership (MLP). As a result, it pays a distribution instead of a dividend and is taxed differently. Typically, MLP distributions are not taxed in the year they are received. Instead, they lower the cost basis and the investor pays tax on a larger capital gain when they sell. But in the meantime, they collect tax-deferred income while they hold it.<\/p>\n

The company operates oil and gas pipelines, with assets in 44 states.<\/p>\n

Last year, the company generated $8.3 billion in distributable cash flow, up from $7.6 billion in 2023. It paid investors $4.6 billion in distributions for a payout ratio of 55%. So, the company was easily able to afford its distribution.<\/p>\n

<\/a>In 2025, the company is projected to grow distributable cash flow to $8.4 billion, while distributions paid is anticipated to shrink to $3.9 billion, for a 46% payout ratio.<\/p>\n

While Energy Transfer\u2019s financials look stellar, the company did cut the distribution in 2020 when times got tough. Sometimes, it\u2019s the prudent thing to do. But I prefer a management team that will do whatever it takes to preserve the dividend. Energy Transfer has shown that it will reduce the distribution, which gets a penalty in the dividend safety rating.<\/p>\n

Energy Transfer has been growing its distribution per share to investors for the past few years and generates plenty of cash flow to do so.<\/p>\n

The only concern is management going into panic mode if the economy goes off the rails again. Otherwise, Energy Transfer\u2019s distribution is pretty safe.<\/p>\n

Dividend Safety Rating: B<\/strong><\/p>\n

\"Dividend<\/p>\n

What stock\u2019s dividend safety would you like me to analyze next? Let me know here.<\/p>\n

You can also take a look to see whether we\u2019ve written about your favorite stock recently. Just click on the word \u201cSearch\u201d at the top right part of the Wealthy Retirement<\/em> homepage, type in the company name, and hit \u201cEnter.\u201d<\/p>\n

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds, or closed-end funds.<\/p>\n<\/p><\/div>\n