Based in Dallas, Energy Transfer (ET) is a limited partnership with one of the largest and most diversified portfolios of energy assets in the nation, notes Mark Skousen, growth and income expert and editor of Home Run Trader.
It owns and operates 120,000 miles of pipelines traversing 41 states, meaning that it transports the oil and gas products that make our standard of living possible.
Energy Transfer transports a quarter of all U.S. natural gas produced and nearly 35% of all U.S. oil produced. It also exports approximately 20% of all liquefied natural gas.
While pipeline companies are sensitive to demand, they are not particularly sensitive to commodity price swings. After all, they’re moving and storing the stuff, not finding and extracting it.
Annual revenue tops $88 billion. And Energy Transfer just reported gangbuster financial results. Third-quarter earnings soared 59% on a 38% increase in revenue. The partnership’s generous cash flow is also allowing it to make acquisitions and pay down debt.
Plus, Energy Transfer has a dividend yield of 8.54%. That dividend should increase as earnings per share are projected to rise from $1.48 this year to nearly $2 in 2023.
In fact, my forecast may prove too conservative. Founder and Executive Chairman Kelcy Warren seems to think so. Over the last three months, he has purchased six million shares of Energy Transfer, an investment of more than $73 million.
He now owns over 55 million shares. It’s safe to say that nobody knows more about Energy Transfer and its prospects than Kelcy Warren, as he has over 40 years of experience in the industry.
In short, this is a highly profitable, fast-growing partnership with experienced management, rapid growth, a fat dividend and heavy insider buying. So, pick up Energy Transfer at market. And enter a sell stop at $10.