Energy Transfer (NYSE: ET) has been facing struggles in 2025, with the stock declining nearly 17% year to date. However, this downturn may actually present investors with a buying opportunity. One key factor that is catching the eye of investors is the stock’s impressive 8% dividend yield, which is not only attractive but also sustainable.
One recent development that could be a catalyst for long-term growth is Energy Transfer’s decision to halt its burdensome Lake Charles liquefied natural gas (LNG) project. This move may free up resources that can now be allocated to the higher-potential Desert Southwest expansion plan. Additionally, the company has been experiencing steady adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) growth and is effectively managing leverage.
Energy Transfer is prioritizing a net-debt-to-EBITDA ratio of 4-4.5, which aligns with its peers and helps mitigate the risk of losing its investment-grade credit rating. The company’s dividend is well-supported by expectations of improving financials as new projects come online, potentially boosting free-cash-flow generation.
One aspect that may not be fully appreciated by investors is Energy Transfer’s exposure to the soaring demand for data centers. The company’s Desert Southwest expansion plan aims to meet additional customer demand, which could include data centers. Given that Texas is a growing hub for data centers and Energy Transfer is the largest intrastate pipeline operator in the state, the company is well-positioned to benefit from this trend.
Before considering investing in Energy Transfer, it’s important to weigh all factors carefully. While the stock may be facing challenges in the short term, the company’s strategic decisions and potential for long-term growth make it worth keeping an eye on.
This article was originally published by The Motley Fool and can be found at https://www.fool.com/investing/2025/12/28/energy-transfer-the-8-yielding-dividend-stock-to-o/.
