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Energy Transfer’s Lofty Distributions Are Much More Sustainable These Days

publication date: Feb 19, 2024
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Image: Energy Transfer covered its distributions with traditional free cash flow in 2023, and the company offers investors an elevated distribution yield. 

Energy Transfer reported mixed fourth-quarter results on February 14, but the company’s traditional free cash flow metrics continue to hold up well, providing support to its lofty distribution. Years ago, pipeline entities were spending much more than they reasonably could to be able to sustain their distributions at prior levels, and many have readjusted both their capital spending trajectories as well as their distributions over the years. These days, pipeline entities such as Energy Transfer, with their geographically diversified portfolio of assets, are in much better shape to sustain their payouts. Units of Energy Transfer yield ~8.7% at the time of this writing.


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